JakartaPost-Dec 30
The year 2024 was when the country finally became aware that its middle class has been shrinking over the past five years. The government, however, has maintained that the economic situation remains under control, despite warnings from businesses and analysts. Statistics Indonesia (BPS) defines the middle class as those with monthly spending of around Rp 2.04 million (US$125.05) to Rp 9.91 million, equivalent to 3.5 to 17 times the poverty line of Rp 582,932 this year. Those with monthly spending between the poverty line and 1.5 times that amount are categorized as vulnerable to poverty, while those spending 1.5 to 3.5 times that figure are referred to as the aspiring middle class. Referring to that classification, it is estimated that 17.13 percent of Indonesia’s population falls into the middle-class category this year, far below the share of 21.45 percent five years ago, according to the agency. The drop has contributed to a rise in other categories, namely the aspiring middle class and those vulnerable to poverty. Maintaining both the middle class and aspiring middle class groups is deemed critical as BPS said the two contributed over 81 percent of the country’s total consumption, making them important drivers of the economy. Bank BCA chief economist David Sumual told The Jakarta Post on Dec. 19 that the shrinking middle class could be due to the fact that the government has been overly occupied with politics, which not only consumes its time, but also a considerable portion of state spending. In some cases, social spending has been disbursed late, which could be a factor in slowing economic growth this year, he said. Meanwhile, BPS data show that the shrinking middle-class population had begun as early as the end of the COVID-19 pandemic. The country’s economic output increased just 4.95 percent annually in this year’s third quarter, according to BPS data, falling below the 5 percent average rate it usually achieves each quarter. There has also been a slow down in household consumption, a key component of the national economy, which contributes over 50 percent to the gross domestic product (GDP). Read more at:
