Despite being officially categorized as an upper-middle-income country, Indonesia still faces a stark poverty challenge, with more than half of its population living below the poverty line for countries in the same income bracket, according to the latest Macro Poverty Outlook published by the World Bank in April 2025.

The report sets the poverty threshold for upper-middle-income nations at US$6.85 (Rp108,000) per person per day, based on the average 2024 exchange rate of Rp15,840 per US dollar. By this measure, 60.3 percent of Indonesia's population, or about 171.9 million people, are considered poor.

The figure presents a sharp contrast when measured against the poverty line for lower-middle-income countries, set at US$3.65 (Rp57,816) per day. Under this standard, the poverty rate in Indonesia drops to 15.6 percent, affecting around 44.3 million people. Still, these figures indicate that poverty remains a persistent problem in Southeast Asia’s largest economy.

Compared to its ASEAN peers, Indonesia’s poverty rate remains among the highest, even when applying the lower poverty threshold. Notably, Vietnam − classified as a lower-middle-income country with a national income per capita of US$4,110 − shows a significantly lower poverty rate. Only 18.2 percent of Vietnamese live below the US$6.85 threshold, while a mere 3.8 percent fall under the US$3.65 benchmark. Vietnam has a population of approximately 101 million.

In contrast, fellow upper-middle-income countries Malaysia and Thailand demonstrate far lower poverty levels. Malaysia’s poverty rate stands at just 1.3 percent under the US$6.85 threshold and 0 percent under the US$3.65 threshold. Thailand, although not included in the detailed comparison in the report, is generally understood to have similarly low poverty levels.

The World Bank defines upper-middle-income economies as those with a gross national income (GNI) per capita between US$4,516 and US$14,005. Indonesia's recent inclusion in this category is seen as a marker of economic progress, but the poverty data reveals a widening gap between national income figures and the actual living standards experienced by a majority of citizens.

The findings highlight a structural disparity within Indonesia’s economy − one that continues to rely heavily on informal labor and underemployment, limiting income growth for a large segment of the population.

Analysts warn that while Indonesia has made notable gains in economic classification, the country must urgently address issues of inequality, labor productivity, and access to social safety nets if it is to ensure inclusive growth that benefits all layers of society.

The report calls for sustained policy reforms focused on improving job quality, expanding access to education and healthcare, and strengthening the country’s social protection systems to bridge the gap between economic status and lived realities.