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Euromonitor International’s Indonesia Income and Expenditure Country Briefing focuses on one of the key emerging markets with the best middle class potential. In 2016, the country recorded the world’s fourth largest middle class with 19.6 million households, which is expected to rise to 23.9 million in 2030, making this group a prominent consumer force in the country. The continued expansion of middle class can be mainly attributed to falling poverty, improved income equality and government measures to boost middle class purchasing power.
Indonesia offers great growth potential for consumer goods companies, given its large and expanding population base, rising disposable incomes and urbanisation. In a bid to further expand consumption levels and the middle class, the government has been implementing various reforms. Under the country’s current (2015-2020) five year development plans, which is a part of its broader National Long-Term Development Plan (2005-2025), the government is focusing on investing in programmes that have a direct positive impact on the lower income earners via spending on infrastructure, education and healthcare. Although the pace of poverty reduction has slowed down lately mainly owing to lower than expected economic growth, the government is determined to eradicate all slums across the nation by 2019. These measures should help the country’s middle class further expand going forward, generating a significant consumer base to drive demand and spending in the country.