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Indonesian poverty drops to historic low as inequality narrows
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A woman walks on a railroad track alongside a slum in Kampung Bandan, Central Jakarta, on Oct. 14, 2022. (Antara/Aditya Pradana Putra)
T
he country’s poverty rate has fallen to a historic low this year while inequality, as measured by the Gini coefficient, has hit its lowest point in more than a decade, but both figures remain below the government’s target.
The poverty rate fell to 9.03 percent in March, beating the previous record of 9.22 percent in 2019. Statistics Indonesia (BPS) director Nurma Midayanti told The Jakarta Post on Tuesday that it was “the lowest” in the country’s history, according to the methodology used since 1998.
The statistics bureau set Rp 582,932 (US$35.56) per capita per month as the poverty threshold in its March survey. The figure is to be updated in the next twice-annual survey.
BCA chief economist David Sumual said the poverty rate falling to a historic low was good news, but he noted that the poverty metric was “tricky” because it was based on a relative definition.
Many Indonesians who are not considered poor are hovering slightly above the threshold and are therefore prone to slipping below the poverty line.
“So when there’s a shift in prices or high inflation, or changes in income or purchasing power, it will affect [the poverty rate]; it will certainly go up,” said David.
The World Bank forecast that Indonesia’s poverty rate could be around 16 percent in 2022 if measured by the global institution’s standard poverty line of $3.2 per day. Meanwhile, the government figure was 9.57 percent in the same year, based on its own threshold.
