 Since tradable and non-tradable goods are complements, this also reduces demand for non-tradable goods.The demand for tradable goods reflects in a reduction in imports; however, the lower demand for non-tradable goods translates into lower output and real depreciation of the currency (lower relative price of non tradable to tradable goods).Firms producing non-tradable goods face an increase in the real cost of financing, as the cost of loans in terms of the price of non-tradable goods rises.