Indonesia’s poverty rate fell to a historic low this year, while inequality, as measured by the Gini coefficient*, hit its lowest in more than a decade. However, both figures remain below the government’s target, according to the latest official data.
The poverty rate fell to 9.03 percent in March, breaking the previous record of 9.22 percent in 2019. Statistics Indonesia Director Nurma Midayanti told the Jakarta Post that it was the lowest in the country’s history, according to a methodology used since 1998.
In its March survey, the statistics bureau set the poverty threshold at Rp 582,932 ($35.56) per capita per month.
David Sumual, chief economist at Bank Central Asia, Indonesia’s largest private bank, said the poverty rate falling to a historic low was good news, but he noted that the poverty measure was “complicated” because it was based on relative indicators.
Many Indonesians who are not considered poor are only slightly above the threshold and are therefore at risk of “slipping” below the poverty line.
David Sumual:
So when there is a price hike or high inflation, or changes in income or purchasing power, all of this affects the poverty rate almost immediately.
Despite the relative improvement, the poverty rate is still significantly lower than planned. For example, the government’s 2024 budget sets the poverty rate target for this year at 6.5 to 7.5 percent.
Sumual added that if all other factors remained constant, the target range set by the government would be “achievable,” but the pandemic has made a very negative contribution.