According to the vice president for industry and regional research of the Enonomist Group of PT Bank Mandiri Tbk Dendi Ramdani, in Jakarta on Thursday (12/5/2022),
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KOMPAS EDITOR
·3 minutes read
HELENA FRANSISCA NABABAN
Residents belonging to the middle class layer enjoy the city of Jakarta by taking public transportation, one of which is the MRT.
The middle class is the cornerstone of this country's economic growth. It has a strong influence on consumption.
Based on data from Statistics Indonesia (BPS), economic growth in the first quarter of 2022 was 5.01 percent on an annual basis. Household spending grew 4.43 percent on an annual basis and 0.19 percent on a quarterly basis. Its contribution to gross domestic product is 53.56 percent.
The stretching of consumption or spending during Ramadan and Idul Fitri will boost economic growth in the second quarter of 2022. This is indicated by the spending index during Ramadan, which grew 31 percent to 179.4, far above the index threshold of 100.
According to the vice president for industry and regional research of the Enonomist Group of PT Bank Mandiri Tbk Dendi Ramdani, in Jakarta on Thursday (12/5/2022), the increase in the Ramadan spending index occurred in all income groups. Middle-income people spent the most money (Kompas, 13/5/2022).
One of them is those who spend US$2 to $20 per day. If this benchmark is used, the middle class in Indonesia comprises around 100 million people.
With regard to this context, the government needs to manage the potential and power of the middle class. There are several criteria regarding the middle class. One of them is those who spend US$2 to $20 per day. If this benchmark is used, the middle class in Indonesia comprises around 100 million people.
Due to its great proportions, this middle class is a significant force. Steps that the government can take are to give confidence or at least signal to them that it has taken the right steps to manage the economy with other financial authorities. This signal is needed so that they remain confident in facing a number of problems as a result of rising food prices, rising energy prices, the mitigation of the pandemic and the war in Ukraine.
If we ask around us, actually this middle-class group is still spending by shopping. However, they have actually started a plan to put on the brakes because the prices of various necessities have started to increase.
If the government gives the wrong signal, they will immediately panic and create more uncertainty. The implications can be very extensive. One of them is that middle-class spending will fall.
Therefore, the government and monetary authorities must be more careful in making policies. Bank Indonesia (BI) needs to be careful when it comes to raising the benchmark interest rate. On the other hand, the government needs to continue its incentives and listen to their political aspirations amid an unfavorable situation.
All these efforts are basically about managing the middle class carefully and calmly. They can be invited to act, but the government should not make mistakes.
