Indonesia’s Central Statistics Agency (BPS) recently reported a decline in the middle class population in the country. In 2019, there were 57.33 million middle-class individuals, but as of March 2024, this number dropped to 47.85 million. Factors contributing to this decline include the impact of the COVID-19 pandemic, job losses in manufacturing, and an increase in consumption tax.
However, defining the middle class can be problematic as there is no universal definition or measurement method. Indonesia refers to the World Bank’s criteria, which suggests the middle class was growing in 2019.
The World Bank acknowledges the ambiguity surrounding the Indonesian middle class, with varying estimates between 30 and 81 million based on different definitions. Their method categorizes individuals based on expenditures, with the middle class spending between 1.2 and 6 million rupiah per month.
In the latest BPS data, although the middle class shrunk by 9.5 million individuals, the aspiring middle class category increased by 8.65 million, maintaining a similar total population. Changes in definitions impact these findings, highlighting the complexity of measuring the middle class.
While there are concerns about a shrinking middle class, indicators like increased domestic tourism and discretionary spending on entertainment suggest growing purchasing power. Despite challenges like job losses and economic weaknesses, Indonesia’s recent economic growth has been positive.
The BPS report is just one aspect of the larger economic landscape, emphasizing the difficulty in accurately defining and measuring the middle class.