Thai exports in 2018 rose 6.7 percent YoY, driven mainly by commodity prices. Nonetheless, Thai export growth was significantly lower than those of our neighboring countries. Traditionally, intermediate goods accounted for a majority of the entire Thai export structure, showing that connectivity with value chains in different countries is important for Thai trade. Nonetheless, the exports of intermediate goods from Thailand have shown signs of slowdown and declining share in the total export structure. However, the share of Thai finished products increased. At the same time, the exports of intermediate goods from Vietnam and the Philippines rose at the expense of the market share of Thai exports, especially electronics. This trend shows Thailand's diminishing competitive edge and less important role in the supply chain of the electronic industry. If the trend continues, it will hurt Thailand's ability to reap profits from the electronic industry, which has promising growth prospects in the future.
Vietnam and the Philippines have replaced Thailand in the supply chain partly because Thailand cannot compete in labor cost with these countries and is unable to attract foreign investors to invest in the manufacturing of such products here. While Thailand has increased its share of final products in our export structure, a majority of Thailand's final products have a low value-added portion. Moreover, Thailand does not have the ability to produce end products requiring innovation and high technologies in the same way as developed countries do. Products with a high valued-added portion are essential because they are a catalyst to promote the process of adding value and development of domestic industries. Therefore, Thai exports are likely to decelerate because the market share of intermediate exports is being replaced by other countries equipped with stronger cost competitiveness, while Thailand cannot boost the potential of our finished and high value-added products. It may not be an exaggeration to say that Thai exports have lost their steam and may be stuck in the middle-income trap.
In spite of these negative factors, Thailand still has bright prospects in the automotive sector, which has increasingly gained a more prominent role in Thai trade and may create more value for local businesses. Nonetheless, Thailand needs to adapt to changing industries and technologies amid fierce competition and various disruptions to maintain their share and boost their comparative advantage in the global trade scene in the auto industry, wherein electronic vehicles are on the rise with an increasing use of digitalization.