A weaker middle class, which has traditionally been the backbone of Indonesia’s economy, could scupper President Prabowo Subianto’s ambitious plans to boost annual GDP growth to 8 per cent in the next five years, from the current 5 per cent, and become a developed economy by 2045. It could also put off much-needed foreign investment.
“Without structural reforms addressing the middle class issues, Indonesia will not achieve 8 per cent growth by 2045, let alone in the next five years,” said Teuku Riefky, a researcher at the Institute for Economic and Social Research.
There is “growing difficulty in getting formal jobs, and economic growth has been creating less formal jobs”, he said. “Growth is not enjoyed by all groups . . . it has not been inclusive.”