Gloomy economic forecast: 9 million drop out of Indonesia's middle class

Summary

In Indonesia, the middle class is shrinking due to layoffs and fewer job opportunities, with the number dropping by 9.5 million since 2019. This decline affects the country's economic growth, as private consumption, largely driven by the middle class, accounts for over half of Indonesia's GDP. The government's target of becoming a high-income nation by 2045 is challenged by this economic shift. The incoming president has pledged to address the issue by boosting economic growth and creating jobs.

Takeaways

• 🏭 A factory worker in Indonesia faces disappointment as his company goes bankrupt just before his retirement.
• 🤝 Colleagues gather to protest the factory's closure, indicating a collective impact on workers.
• 📉 The factory experienced a significant decline in product due to weak demand and reduced purchasing power in 2019.
• 📊 Over 57 million Indonesians were middle class in 2019, but recent data shows a drop of about 9.5 million.
• 🔍 The decline in the middle class is attributed to increasing layoffs and fewer job opportunities.
• 👔 The textiles industry is particularly hard hit, with the worst redundancies in over a decade.
• 🌐 Indonesia, a major consumer market, sees private consumption as a key driver of economic growth, accounting for more than half of its GDP.
• 💼 The shrinking middle class poses a challenge for Indonesia's goal to become a high-income nation by 2045.
• 💸 The government defines middle class as those spending between $130 to $640 a month, with those below more vulnerable to economic shocks.
• 🏠 For many, daily needs are becoming unaffordable, highlighting the personal struggles amidst economic changes.
• 🌍 The declining middle class is a global issue, not unique to Indonesia, as acknowledged by President Joko Widodo.
• 🔝 Incoming President Prabowo Subianto promises to boost economic growth and create 19 million jobs.

Q & A

What is the main issue faced by Supro and his colleagues?

Supro and his colleagues are facing the issue of the factory they worked at going bankrupt, which has left them jobless and disappointed, especially as many of them were nearing retirement.

What was the impact of weak demand on the factory's product in 2019?

In 2019, the factory experienced a steep decline in product due to weak demand, as people's purchasing power went down, leading to financial difficulties for the business.

How has the middle-class population in Indonesia changed recently?

The middle-class population in Indonesia has dropped by about 9.5 million, with more than 57 million classified as middle class in 2019, indicating a significant decline.

What are the consequences of the shrinking middle class for Indonesia's economy?

The shrinking middle class may make it more challenging for the Indonesian government to achieve its target of becoming a high-income nation by 2045, as private consumption, largely driven by the middle class, is a key driver of economic growth.

How does the Indonesian government define the middle class?

The Indonesian government considers those who spend between $130 to $640 a month to be middle class, which is a significant segment of the population that contributes to economic growth.

What is the role of the middle class in Indonesia's GDP?

The middle class plays a crucial role in Indonesia's GDP, as private consumption accounts for more than half of the country's GDP, and this is largely powered by the middle class.

What is the situation in the textiles industry regarding job losses?

The textiles industry in Indonesia is seeing its worst redundancies in more than a decade, reflecting the broader economic challenges faced by the country.

How does the economic slowdown affect the daily lives of Indonesians?

The economic slowdown has made it difficult for many Indonesians to meet their daily needs, with some unable to find new jobs or experience stagnant wages, leading to unaffordable daily expenses.

What is the stance of President Joko Woto on the declining middle class?

President Joko Woto acknowledges that the declining middle class is not a problem unique to Indonesia but is a global issue affecting many countries, attributing it to a global economic slowdown.

What promises has the incoming president, Prao Subbiano, made regarding the economy?

Incoming president Prao Subbiano has promised to boost economic growth and create 19 million jobs, aiming to address the challenges faced by the declining middle class and job losses.

How does the script illustrate the personal impact of economic changes on Supro's family?

The script illustrates the personal impact of economic changes by showing Supro's inability to provide for his family's needs, with his husband unable to find a new job and his son unemployed, reflecting the broader economic struggles.