Key facts
- Households across Southeast Asia face rising prices, higher borrowing costs, and insecure jobs.
- Governments are urged to do more to protect the middle class, which drives consumer spending.
- The Asian Development Bank Institute recommended targeted support for the middle class in the Philippines.
- Nearly 40% of Indonesia's middle class fell into vulnerable or poor categories in the past year.
- Almost half of Indonesia's population lives just above the poverty line and is susceptible to economic shocks.
- The erosion of the middle class threatens domestic consumption, job quality, and democratic resilience in Indonesia.
Households across Southeast Asia are facing a challenging economic environment characterized by rising prices, increased borrowing costs, and job insecurity. Analysts suggest that governments should enhance support for the middle class, a demographic crucial for driving consumer spending but often overlooked by social protection systems primarily designed for lower-income households.
The issue has gained prominence in the Philippines, where the Asian Development Bank Institute (ADBI) recommended in September that the government implement targeted measures to protect the middle class.
In Indonesia, a report highlights that poverty reduction alone is insufficient, and the nation's fragile and shrinking middle class requires prioritization to ensure sustainable growth and social cohesion. The report indicates that nearly 40% of the middle class in Indonesia fell into vulnerable or poor categories over the past year, underscoring significant welfare risks. With approximately half of the population living just above the poverty line, many are highly susceptible to economic shocks. The erosion of this demographic threatens domestic consumption, job quality, and democratic resilience, necessitating targeted public policies focused on stable employment, expanded social protection, and addressing urban-rural disparities.