Indonesia’s economy continues to grow at around 5% a year, but millions of people are struggling to feel the benefit. A new Foreign Policy analysis argues that this gap between strong headline growth and weaker household finances is becoming a major challenge for President Prabowo Subianto.
Strong Economy on Paper
Indonesia has many advantages: a population of around 290 million, about 70% of whom are working age, a median age near 30, and huge reserves of nickel, palm oil, coal and gas.
The economy has maintained growth of roughly 5% since the pandemic, and the World Bank expects another 5% expansion in 2026.
But confidence in Prabowo is weakening. His approval rating has fallen from 81.2% in November 2025 to 51.1% in July 2026, as households face higher living costs and weaker job prospects.
Indonesia’s Middle Class Is Shrinking
The deeper problem is who benefits from that growth.
According to the World Bank figures cited by Foreign Policy, the share of workers earning middle-class incomes fell from 14.5% in 2018 to 7.1% in 2025.
Indonesia’s own statistics agency, using a different income threshold, also shows a decline, from 21.4% in 2019 to 16.6% last year. Real wages for medium- and high-skilled workers have also fallen.
Meanwhile, more workers are moving from formal jobs into lower-paid informal employment, weakening the consumer spending Indonesia depends on for growth.
Growth Is Also Becoming More Unequal
Economic inequality remains another concern.
Research group CELIOS estimates that the combined wealth of Indonesia’s 50 richest people equals that of around 55 million ordinary Indonesians.
Their wealth has been increasing by around $770,000 a day, compared with roughly 10 cents a day for an average worker, according to the analysis.
Prabowo’s large social programs mainly target poorer households. That can leave the middle class in an uncomfortable position: too wealthy to qualify for many benefits, but not wealthy enough to comfortably absorb rising prices, weak wages and job insecurity.
Can Prabowo Deliver Faster Growth?
Prabowo is targeting around 6% growth next year and continues to push policies focused on food and energy self-sufficiency, welfare spending and greater state control of strategic industries.
But recent growth has relied heavily on government spending, while private investment has been weaker. Markets have also shown concern about policy direction, with the rupiah and Indonesian assets coming under pressure earlier this year.
So, Indonesia’s problem is not a lack of economic growth. It is that 5% growth is no longer translating into the stronger wages, secure jobs and expanding middle class that many Indonesians expected. For Prabowo, keeping GDP growing may be easier than convincing households that they are actually becoming better off.
Related: Why 2026 could be another rocky year for global trade
