Indonesia’s current account deficit pressures the middle class, forcing them to use their savings. The rupiah’s volatility has increased import costs, reducing household expenditure. Additionally, 81,290 layoffs between 2024 and 2025 and a significant decrease in middle class spending, from 21.45% in 2019 to 17.13% in 2024, paint a bleak outlook for the country’s economy.
The World Bank warns that the current account deficit could exceed pre-pandemic levels, projected at 1.4% of GDP in 2025 and 1.6% in 2026–2027. This raises the stakes for external financing and threatens the stability of the rupiah.
The combination of rising layoffs, a widening deficit, and a shrinking middle class casts doubt on the new government’s ambition to expand the middle class by 38% by 2029. Quick fixes — such as labour-intensive industries — might create jobs, but without efforts to boost domestic demand, the impact could be short-lived. Given all this, the government’s targets seem increasingly out of reach.
