In 2019, Indonesia’s middle class numbered around 57.3 million, but by March 2024, it had dropped sharply to approximately 47.8 million—highlighting a major loss in a vital engine of domestic consumption. Nonetheless, the country’s economy showed resilience in the second quarter of 2025, with GDP growth surprisingly strong at 5.12% year-on-year. This rebound was largely driven by a surge in investment, which helped reverse a sluggish first quarter. Private consumption also remained a stable pillar, buoyed by tourism and exports (though imports rose sharply), while the sharp decline in government spending has started to ease.

Despite these improvements, ANZ Research cautions that growth may not accelerate further in the near term due to both external and internal vulnerabilities. Global headwinds—like rising US tariffs and cooling worldwide demand—could pressure net exports. Meanwhile, domestic labour market weaknesses persist: a shrinking middle class, elevated informal employment, job insecurity, and weak consumer and loan demand continue to constrain spending power. On the plus side, public sector activity could help temper slowdown risks. With only 40% of the budget spent in the first half of 2025, there is significant scope for fiscal catch-up in the second half. Key public-led initiatives include the sovereign wealth fund Danone’s USD 5 billion investment goal, Jakarta’s sea wall project, and a program to develop three million new housing units—all expected to support domestic demand going forward 

Source: 
https://www.anz.com.au/bluenotes/2025/august/tan-indonesia-growth-middle-class/