Indonesian middle class struggle could hurt economy and ‘likely’ spark unrest: experts

Economists warn that Indonesia’s shrinking middle class could hamper the country’s ambition to achieve developed-nation status and spark social unrest if the government continues to ignore the group.

The country’s statistics agency reported on Aug. 30 that the middle class reached 47.85 million this year, down from 57.33 million in 2019. The middle class and aspiring middle class now account for 66.35 percent of the population, or 185.35 million people, according to the agency.

“From 2014 to 2019, the (middle class) rose from 41 percent to 53 percent. After the pandemic, it gradually declined (and) there is a ‘long Covid’ for the economy,” the agency’s acting head, Amalia Adininggar, told reporters.

According to Amalia, Indonesia’s middle class is mainly Gen X and millennials, holds a high school or college degree, lives in cities and works in the formal sector. Both the middle class and aspiring middle class demographics supported Indonesia’s economy, she said, as they contributed 81.49 percent of domestic consumption, the mainstay of Indonesia’s US$1.3 trillion economy.

In Indonesia, the middle class is classified as people with a monthly income between 2.04 million (US$132) and 9.90 million rupiah (US$640), while the emerging middle class consists of people with a monthly income between 874,000 rupiah and 2.04 million rupiah.