The marriage of the two unicorns
Indonesia has seen an interesting story about the merger of two unicorns, Gojek, a ride-hailing start-up, and Tokopedia, a marketplace platform, both of which were "unicorns" before the merger. The merger of the two companies strengthens the technology companies to reach a possible valuation of second after the largest market-capitalized company in Indonesia, Bank BCA. Each company had already amassed millions of loyal customers. With the mergers, sales of the products of Tokopedia will be carried to the customers through the ride-hailing fleet in the Gojek system so that the profit opportunity will increase significantly. At the same time, Gojek's database will further empower the customer base of Tokopedia.
Meanwhile, on the domestic front, the Indonesian economy has continued to improve by slashing the negative growth rates quarter after quarter. If in Q4 of 2020, the Indonesian economy still suffered negative growth of 2.19%, the economic decline has lessened, even though statistically speaking, Indonesia still reported negative growth of 0.74%.
The improvement of the economy was accompanied by a deficit of current account for the quarter. While in Q4 2020, Indonesia's current account produced a surplus of $892 million or 0.33% of GDP, the current account registered a deficit in Q1 2021 of $997 million or 0.36% of GDP. Since the financial and capital account in the balance of payments in Q1 2021 recorded a large surplus, the overall balance of payments registered a surplus of approximately $4,065 million, leading the foreign exchange reserves of the Central Bank to a level of $137,095 million in March 2021. Central Bank reserves also increased in April, to $138,799 million.
The Central Board of Statistics also released the balance of trade data for April 2021. Exports increased slightly, by 0.69% M/M, to reach $18,480.4 million in April, while imports declined marginally, by 2.98%, to reach $16.286.4 million, resulting in a large trade surplus of $2,194.0 million. The trade surplus is predicted to persist in the coming months.
The Central Board of Statistics also released the inflation report, which showed mild inflation for the month of April at 0.13%. With that performance, Y/Y inflation stood at 1.44%, a level below the target corridor of the Central Bank. The Central Bank was of the view that the economy is improving steadily. Therefore, with inflation subdued and the exchange rate and foreign exchange reserves at comfortable levels, Bank Indonesia decided to keep the bench mark rate at 3.50% at its most recent monetary policy meeting.
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