17/08/2015
Saudi Imports price from chine is expected to decline by 20%
Experts expect that China yuan devaluation is going to affect the Saudi market, and they pointed out that the rate of the price of Saudi imports from china will decrease by 10 to 20 percent since the Saudi market depends on many chines imports. Wasif Kabli Deputy Chairman of the Commercial Committee of the Jeddah Chamber of Commerce and Industry said that chine devaluating its currency would affect its economy immesnly, which is a step that will help china regain its position in the market after the pressure from the United States and Europe. He added that this devaluation has affected the Saudi market in indirect and insignificant way, but china has been affected by that given the strength of the US dollar, thus the price of its imports will be affected in the coming period. He pointed that price of chines imports of most products to the Saudi market will be affected insignificantly, which is the US dollar’s effect on the price of the Saudi and Chinese import. He noted that the price of many products will decrease and will be affected but in a limited and differing rate, since the Saudi market is dependent on a lot of the products and exports in most of its sectors and industries. But he assured that the effect will be very limited during the next period.
For his part, Abdulrahman Al-Sultan, an economic analyst has stated that since china is a business partner with Saudi, the devaluation of the chinse currency will naturally reduce the importing costs, thus, the cost of buying from china. As for Saudi importers, this devaluation is of no substantial effect on sold goods, since they are directly influenced by the dollar, also, the Chinse yuan has only decreased by 3%. Also, the monopolistic nature of the Saudi market where importers can control the prices, which turns the decrement to a profit margin for the importers, thus, it does not change the products price in the actual market.
As for the oil exports for china, Al-Sultan mentioned that Saudi’s oil exports to china would be not affected significantly, especially since the price of oil has decreased by 40% compared to last year, thus, it would not have a noticeable impact on the Saudi market. He added that what will influence the chinse demand of oil is the economic situation in china. The chinse economy has been one of the strongest economies for two decades. China is the second biggest consumer of oil, which will influence the Chinese performance during the next period. It might not be good, the growth rate of energy demand as it has happened in previous years.
For his part, Riyad Ahmed Al-Thagafi, Ewaan CEO said that the effect of this devaluation on the real estate market is limited, since it is related to other factors, like the drop in oil prices, and input materials prices, which leads to the a competitor for the Saudi product emerging in the market. Another effective factor is Currency depreciation in the European market, china and turkey, which leads to lowering the prices of the imported construction materials.
Al-Thaqfi added that the current yuan devaluation which is decreased by 10 to 20% is not going to affect the products price in the market but it will has its effect on the price of imported materials. Moreover, it will have an impact on the Saudi manufacturer who used to benefit of the support provided for electricity prices and the controlled prices, which does not change.
The People’s Bank of China devalued the Chinese yuan against the US dollar by 1.9%, which is considered the lowest in two decades. It announced a significant modification of the yuan’s exchange rate regime according to the market, which lead to the price dropping by 1.6% more. Thus, the global markets has dropped, mainly the global stock markets of Asia, Europe and the United States, they had suffer a significant loss because of the China yuan devaluation.
