UNAIR NEWS – Recent data indicates an alarming decline in Indonesia’s middle class, with increasing numbers falling into categories like poor, near-poor, and the Aspiring Middle Class (AMC).
Data from Statistics Indonesia (BPS) predicts a decline in the middle-class population from 57.33 million people in 2019 to just 47.85 million in 2024. The primary factor behind this decline is the COVID-19 pandemic, which has severely impacted various sectors, particularly international trade. Reduced global demand has forced companies to cut their workforce.
Household consumption is a key driver of economic growth, contributing approximately 60% of Indonesia’s Gross Domestic Product (GDP). If the middle class continues to shrink, economic growth will slow down. The most affected sector is trade, particularly due to the trade war between the United States and China. This situation has pushed China to seek new markets, intensifying competition in Indonesia’s micro, small, and medium enterprises (MSME) sector.
Signs of declining purchasing power among the public are already evident. In 2024, deflation occurred for four consecutive months from May to August. As a solution, the government needs to implement monetary and fiscal policies that support job creation. Bank Indonesia and the Financial Services Authority (OJK) must be more active in encouraging people to create job opportunities, rather than merely seeking employment.
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