The Thai export sector has lost competitiveness in global markets, with the market share of rice shipments falling by more than 50% over the past 20 years, according to the Bank of Thailand (BoT).
Long-standing structural impediments in the export and manufacturing sectors are having a more discernible impact on the Thai economy, said the central bank.
Among the products that dented export value growth last year, more than 70% recorded declining competitiveness and other structural headwinds, noted the report.
Agricultural products such as rice reported a lower market share, from 25% in 2003 to 13% at present, according to the BoT's edited minutes of the Monetary Policy Committee (MPC) meeting on Feb 2 and 7, published on Wednesday.
Petrochemical goods are being affected by China's dual circulation strategy, while hard disk drives are being substituted by solid state drives, which Thai producers lack the capability to produce, noted the report.
Thailand's electronics export growth averaged only 4% over the past decade, well below its regional peers such as Vietnam, the Philippines and Malaysia, which posted export growth of 37%, 14% and 10%, respectively.
Moreover, manufacturing of goods sold domestically also faced more intense competition from imports.
The share of imports from China alone increased from 5% to 9% over the same period.
The central bank said exports and manufacturing activity should expand at a moderate pace, in line with the slow recovery in global demand and softer tailwinds from the electronics cycle upturn.
However, structural obstacles, particularly deteriorating competitiveness in the export sector, would increasingly hamper growth and limit spillover benefits from a global demand recovery in the absence of structural reforms.
At the latest meeting, the MPC voted 5-2 to maintain the policy rate at 2.5%. Two members voted to cut the rate by a quarter percentage point.
In addition, the MPC said the current loan-to-value (LTV) measures remain appropriate.
Some property developers recently asked the Finance Ministry to loosen the LTV measures to increase activity in the sector.
However, the MPC decided the current LTV measures remained conducive to housing affordability for the vast majority of the public, with 90% of buyers unconstrained by the criteria and able to obtain loans at 100% of property value without a down payment.
The current LTV rates in Thailand are 90-100% for first residences, which are lax relative to countries such as South Korea, Singapore and New Zealand, which are 50-70%, 75% and 80%, respectively.
Housing market activities are continuing to expand, with rising sales and property transfers.
Supply is recovering, with a higher number of new residential properties for sale, according to the MPC. An improving real estate business confidence index indicated an outlook of steady growth.
"LTV loosening could pose risks to financial stability through increased speculation in the real estate sector that drives up prices in some segments and overborrowing by some buyers. The ongoing deleveraging process could be disrupted, with implications for the financial system's fragilities in the longer term," the MPC said in the report.