Indonesian economy shows macro strength but struggles with public purchasing power, expert says

Indonesia's economy presents a complex picture, with robust macroeconomic growth figures masking significant challenges faced by ordinary citizens, according to Dr. Diana Hasan, an economics expert from Muhammadiyah University of Jakarta (UMJ).

While Indonesia's economy grew around 5.29 percent in the second quarter of 2026, Dr. Hasan points out that many Indonesians are grappling with increased living expenses, fluctuating prices of essential goods, and diminishing incomes. This situation leaves many in a precarious state, struggling to make ends meet.

Dr. Hasan, also a member of the Central Leadership Council for Aisyiyah's Economy and Labor, identifies weakened purchasing power as a primary concern. The rising cost of living severely limits people's ability to save. Additionally, the depreciation of the rupiah against the US dollar impacts the prices of imported goods and increases logistics costs for industries, further straining the economy.

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In this condition, the most vulnerable groups to economic pressure include informal sector workers, the vulnerable middle class, and low-income households.

The expert highlights that informal sector workers, the vulnerable middle class, and low-income households are the most susceptible to these economic pressures. Informal workers often lack stable incomes and adequate social security, while the newly emerged middle class has limited savings, making them prone to falling back into poverty when essential goods prices surge. Low-income households, already dedicating most of their earnings to basic needs, are particularly vulnerable.

To effectively address these issues, Dr. Hasan stresses the importance of accurate data. She advocates for an integrated national socioeconomic data system, such as the National Socioeconomic Single Data (DTSEN) and the Socioeconomic Registration (Regsosek), to accurately identify vulnerable groups and inform government policy. Without precise data, crafting effective strategies to alleviate economic hardship and improve the well-being of the populace remains a significant challenge.

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The cost of living is becoming increasingly tight, leaving less room for people to save. Additionally, the pressure of the rupiah exchange rate against the US dollar can impact the prices of imported goods and logistics costs for industries.