THE World Bank raised its poverty line standard in June 2025, after adopting the 2021 purchasing power parity (PPP) calculation to replace the 2017 PPP calculation.
With this new calculation, the international poverty line becomes USD 3.00 per person per day from the previous USD 2.15. With the 2021 PPP, the poverty line for lower-middle-income countries becomes USD 4.20 (from USD 3.65); for upper-income countries it becomes USD 8.30 (from USD 6.85).
With this new calculation, the number of poor people in Indonesia is at 68.2% or equivalent to 194.4 million people out of a total population of 285.1 million people in 2024.
This figure has increased sharply compared to last April which still used the 2017 PPP, as much as 60.3% of the total population in 2024.
What to do next?
Hence, the Indonesian government needs to update the calculation of Indonesia’s poverty line which has not changed for 26 years. The revision of the national poverty line is reasonable.
This is because, as the country becomes more prosperous, consumption patterns also change. If the national poverty line is not updated, it will have implications for the direction of economic policy.
In addition, people will feel marginalized because the data does not reflect the real conditions they feel. Until now, Indonesia is still implementing its own national poverty line calculation.
Based on the current poverty line, BPS recorded the poverty rate as of September 2024 was 8.57% or around 24.06 million people.
Economic outlook
The World Bank has cut its projection for Indonesia’s economic growth. In the June 2025 edition of the Global Economic Prospects (GEP), it is stated that the Indonesian economy will only grow 4.7% this year, and 4.8% in 2026. Only in 2027 will it be able to return to the 5% level. In the January edition of the GEP, the Indonesian economy is predicted to grow 5.1% for 2025 and 2026.
The World Bank also estimates that the global economy will only grow 2.3% in 2025, and 2.4% in 2026. Down from the previous estimate of 2.7% in 2025 and 2026. The weak global economic growth will make developing countries outside Asia unable to carry out development.
Meanwhile, Bank Indonesia (BI) released the results of the Consumer Survey.
The Consumer Confidence Index (CCI) in May was at 117.5, still above 100, indicating that consumers are optimistic about the current economy for the next 6 months. However, this level is far below the April CCI of 121.7, also the lowest since September 2022.
The Current Economic Index (IKE) was at 106 in May, much lower than April’s 113.7. Meanwhile, the May Consumer Expectation Index (IEK) was at 129, still below April’s 129.8.
Consumer confidence declined across all spending groups. The deepest was in spending of IDR 4.1-IDR 5 million with the CCI dropping 7.5 points to 117.7. People with the lowest spending, IDR 1 million – IDR 2 million, actually fell slightly by 2.4 points to 112.3. Respondent’s perception of the availability of jobs are currently in the pessimistic zone.
