Indef: Fiscal Stimulus Should Target the Middle Class

Jakarta (ANTARA) – The Institute for Development of Economics and Finance (Indef) says the government’s fiscal stimulus should pay greater attention to the middle class, which is facing pressure on its purchasing power from rising everyday costs and tax burdens.

Riza Annisa Pujarama, a researcher at Indef’s Centre for Macroeconomics and Finance, said low-income people had received social protection through various government assistance programmes, while the middle class continued to face economic pressures.

“The concern is that the number of middle-income people, or the middle class, is shrinking year by year. This is something the government really needs to pay attention to,” Riza said during an online discussion in Jakarta on Thursday.

Statistics Indonesia (BPS) data show that the middle-class population fell from 57.33 million, or 21.45 per cent of the total population, in 2019 to 47.85 million, or 17.13 per cent, in 2024.

The figure contracted further in 2025 to 46.7 million, or 16.6 per cent of the population.

Under BPS’s expenditure classification, the middle class comprises people who spend around Rp2 million to Rp9.9 million per capita per month.

Riza said support for the middle class did not always need to take the form of cash assistance. The government could also reduce the costs of education, basic necessities and healthcare.

She suggested improving access to education, controlling the prices of staple goods and offering tax relief on certain essential items as ways to support the middle class.

Riza also said the government should address the availability of public early childhood education (PAUD) facilities, which remain far fewer in number than private facilities.

She said the quality of education from PAUD through primary and lower secondary school was an important foundation for developing human resources.

In addition to education, she said the government should ensure everyday necessities, particularly food, remain affordable and consider reducing value-added tax (VAT) on selected items.

Riza cited healthcare necessities for people with disabilities, such as hearing aids and wheelchairs, which receive VAT relief in some countries.

She also highlighted women’s basic necessities, including sanitary pads, as items that should be considered in tax policy.