The Bank of Thailand (BoT) has highlighted a decline in the competitiveness of Thailand’s export sector, particularly in rice shipments, which have seen a market share drop of over 50% in the last two decades. The central bank noted that long-standing issues in the export and manufacturing sectors are impacting the overall economy.
The recent report from the BoT revealed that more than 70% of products suffered from reduced competitiveness and structural challenges last year. For instance, agricultural products like rice now hold a market share of 13% compared to 25% in 2003. Petrochemical goods are facing challenges due to China’s strategy, while solid state drives are replacing hard disk drives, a product Thai producers struggle to manufacture.
Thailand’s electronics exports have only seen an average growth of 4% in the past ten years, lagging behind neighboring countries like Vietnam, the Philippines, and Malaysia, which have witnessed much higher export growth rates.
Moreover, domestic manufacturing is also feeling pressure from increased imports, especially from China, which have risen from 5% to 9% over the same period.
The BoT anticipates that export and manufacturing growth will be modest, influenced by global demand recovery and the fluctuating electronics cycle. However, the report emphasizes that without structural reforms to address competitiveness issues, growth could be hindered.
During the latest meeting, the Monetary Policy Committee (MPC) voted 5-2 to maintain the policy rate at 2.5%, with two members advocating for a rate cut. Additionally, the MPC determined that the current loan-to-value (LTV) measures are suitable to maintain housing affordability, despite calls from property developers to relax them.
While the housing market is showing signs of growth with increased sales and property transfers, the MPC cautioned against loosening LTV measures, as this could lead to financial stability risks by fueling speculation and overborrowing in the real estate sector.
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