86 million Indonesians face economic vulnerability, report warns

Jakarta, Thekabarnews.com—Indonesia’s ambition to escape the middle-income trap is facing growing challenges. This is because weakening purchasing power and a shrinking middle class threaten the country’s economic trajectory.

Household spending, which constitutes about 54 percent of Indonesia’s economy, is still a big part of growth. However, experts say that this foundation could become weaker if people lose power. This scenario is especially likely since the cost of living keeps going up.

The Mandiri Institute reports that 86 million people, or about one in three Indonesians, are in the “transitional middle class.” This group includes middle-class families who want to get ahead and lower-middle-class people who might still lose their jobs.

One of the biggest problems, according to Bank Mandiri chief economist Andry Asmoro, is making sure that this group of people who are going through a change can get into a more stable economic situation.

“The main challenge is to give people in the transitional group enough upward mobility so that they can move up to a more stable economic level,” Andry said, Sunday, April 12, as quoted in Kontan.

Over the past few years, it has become clearer how weak this group is. Well over 11 million people in the lower middle class had worse finances between 2019 and 2025. Furthermore, the upper middle class has not grown much. At the same time, it looks like the transitional group is slowing down.

Andry says the work is not excellent. More than half of the people in the transitional group work in the formal sector. However, these jobs are not always as good as middle-class jobs that are more stable.

This gap makes it harder for people to save money and get their finances in order. In addition, many people remain vulnerable to inflation and higher living costs, which strain household finances.

Andry says that many people could face more financial difficulty if jobs worsen or pay declines. Prices keep going up, and people do not have enough money to buy what they need. Such developments could make the economy as a whole grow more slowly.

The results show that changing the structure, especially in the job market, is crucial for long-term growth. Indonesia needs to move up from the middle-income level. Improving jobs, increasing pay, and providing more opportunities for people to earn money can achieve these goals.

Andry also stresses the need for policies that help people make more money and keep poor families safe from sudden changes in the economy.

To keep Indonesia’s economy growing over the long term, it will be essential to ensure that the middle class is strong.

If the country doesn’t implement effective economic policies and invest in education and infrastructure, it may struggle to become richer.

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