Growing or Shrinking? How Indonesia’s Middle Class is Really Doing
“Indonesia’s middle class is the backbone of its economy whose growth relies mostly on household consumption. The middle class accounted for 38.3 per cent of total household consumption in 2024. They also pay a significant share of all indirect tax revenues and help create jobs as business owners. There has, however, been some debate about whether Indonesia’s middle class is shrinking or growing. It is important to get the narrative right.”
“Relatedly, financial savings are also drawn down. The monthly growth of third-party funds in savings accounts under IDR100 million has steadily declined since January 2018, from 8.5 per cent to below five per cent in January 2024. The average balance per savings account below IDR100 million dropped by 40 per cent between 2019 and 2024.”
“The middle class generally relies on holding good and secure jobs to afford middle class lifestyles, as a World Bank jobs report shows. But the quality of jobs has been deteriorating with the informality rate increasing from 49.5 per cent in 2018 to 51.5 per cent in 2023 (Figure 2), and underemployment increasing from 28.8 per cent in 2018 to 31.0 per cent in 2023.”
Source: Fulcrum