Indonesia’s economy has bounced back on paper, but a new report warns of a hidden problem: the middle class is shrinking fast. Figures from Statistics Indonesia (BPS) show that in 2019, there were 57.3 million people in this group. By early 2024, that number had fallen to 47.8 million.
The decline is linked to the pandemic but also shows deeper cracks. For years, the middle class has driven spending, making up close to half of household consumption. That role is now under threat.
Economist Krystal Tan from ANZ Asia said the country’s GDP numbers look fine, but household finances do not. Investment has picked up again, yet private consumption is flat. Families are weighed down by layoffs, rising debt, and reliance on informal jobs.
Many who once saw themselves as middle class have slipped backward, reclassified as “pre-middle-class.” For a country that wants to become a high-income economy by 2045, this shift is troubling.
The report says the government must act: steady jobs, fewer barriers for entrepreneurs, better training and education. Without it, the middle class will keep shrinking.
Analysts warn that growth is not only about GDP. A strong middle class is essential. If Indonesia fails to protect it, the country risks falling into the “middle-income trap.” That means stuck between cheaper rivals and wealthier nations with stronger skills and industries.
The report argues the solution lies in people: investment in human capital and policies that keep households secure. Only then can growth be both stable and shared.
