How did Saudi import duty increase impact demand for domestic goods

Nowadays, it is normal to find products from every part of the world in almost every grocery store. Consumers see this every day. And it is all possible thanks to shipping and logistics companies who deal with import and export. But do the consumers think about how import duty increases impact demand for domestic goods? There are more choices for consumers, but at what cost? Imported goods are usually made more cheaply than domestic goods, which is a plus for the consumers, but how does it impact a countries economy?

How does import impact GDP?

Import is the process of buying goods from foreign countries, while export is the shipping of goods from a certain country to foreign countries. When logistics companies in Middle East import more than they export it can distort the balance of trade. This leads to the devaluation of the countries currencies, which greatly impacts the life of the countries citizens.

Woman shopping without thinking about the import duty increase impact demand for domestic goods
Consumers can find items from all over the world in almost every grocery store

Apart from that this disbalance influences:

  • GDP of a country
  • Exchange rate
  • Level of inflation
  • Interest rates

Why are domestic goods better than imported items?

Apart from the fact that the quality of the domestic product is way higher than imported goods, there are many benefits to using domestic goods. The export of domestic goods through Saudi customs clearance contributes to the economic stability of a country. Many people get jobs in industries that have a high output. This also results in a flow of funds into the country that stimulates economic growth and consumer spending on domestic goods.

How does import duty increase impact demand for domestic goods?

When a lot of goods are being imported through Riyadh customs clearance, it represents an outflow of cash. A high level of imports destabilizes the economy. A healthy economy is one where both imports and export are equal. Import duty increases impact demand for domestic goods in a negative way because they stimulate the customers to buy the cheaper imported goods. Because of this, there is a surplus of domestic goods, and factories don’t need to produce more. This leads to a chain of negative effects.

Dollar bills and masks on a white surface
There is a chain of negative effects as a result of a disproportionate import duty

The effect of import on demand

Domestic producers are forced to lower their prices in order to beat the prices of imported goods. The producers need to pay the same prices for utilities, while they need to lower the prices of their goods. This impacts the businesses in a negative way. After a relocation to Saudi Arabia, you can see how this affects a countries economy because this is happening in KSA to some extend.

How did Saudi import duty increase impact demand for domestic goods – conclusion

As you can see, even tho export is more favorable than import, there needs to be a balance. A balanced economy results in a good life for its citizens. The economy of many countries was thrown off balance because of the pandemic. Only time and effort can fix the effects of import duty increase impact demand for domestic goods.

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