Understanding the Middle Class Crisis

The term “Middle Class Crisis” has been circulating in the ether as of late, becoming a hot topic for discussion. However, who exactly falls into the middle class category, and why is the decline in the number of middle class citizens in Indonesia a crisis for the country? Moreover, how can we as individuals prepare our personal finances to brace ourselves for the impact of this crisis? Let’s examine this together.

Who is the middle class?

The middle class in a society is a group of people whose income is higher than that of the lower economic groups, but who do not have significant wealth like the upper class. The middle class generally has access to a good education and more flexible finances.

The decline of the middle class in Indonesia

Over the past five years, the number of middle class citizens in Indonesia has dropped drastically. Based on data from Indonesia’s Central Statistics Agency (BPS), the amount of middle class population in 2019 amounted to 57,33 million people. However, in 2024, this number decreased to 47,85 million people

In the last five years, the number of middle class people in Indonesia has dropped drastically. Based on data from the Central Statistics Agency (BPS), the middle class population in Indonesia in 2019 was 57.33 million people. However, in 2024, this number decreased to 47.85 million people.

This difference of 9.48 million people was triggered by various factors such as inflation, rising prices of basic necessities, economic uncertainty, and even the residual impact of the COVID-19 pandemic. Because of this, the middle class is placed under increasing financial pressure, resulting in a decline in household consumption and the ability to save and invest.

This decline is a major concern as the middle class is considered the main driver of consumption and economic growth in Indonesia.

Impact of the middle class crisis on the country's economy

The middle class crisis is critical for the country's economy as Indonesia relies heavily on domestic consumption as the main pillar of the economy. The consumer goods industry, tourism, and other service sectors that have been dependent on middle-class consumption could be hampered by this crisis.

In addition, the decline in the number of middle class people may also reduce the level of investment in the country, which will inevitably impact the financial sector as well. Without good financial management, this crisis will widen the disparity between the upper and lower classes.

How to overcome the middle class crisis as an individual

Inflation and economic uncertainty are always a given. Therefore, it is important for us to prepare our personal finances to be able to face these changes. By improving the way we manage our money, we can maintain financial stability while maintaining our purchasing power and ability to invest.

One way to maintain financial security is to set aside funds regularly through trusted banking products. For this, Nobu Bank offers a Daily Savings feature that allows you to receive savings interest directly into your account every day.

In addition to saving, investing can also be a solution to prepare for long-term personal finance. For more financial management tips, please read here.

The middle class crisis is a serious issue with the potential of having a far-reaching impact on the Indonesian economy. To deal with it, it is important for every individual to manage their personal finances well in order to maintain long-term financial health. By doing this, every member of society is not only helping themselves financially, but also contributing to the sustainability of the country's economy.