A Fractured Engines of Growth: Wealthy Spend while Lower and Middle Classes Stall

JAKARTA, Investortrust.id — Indonesia’s economic growth slowed across every income tier in the second quarter of 2026, revealing an increasingly unbalanced economic expansion where affluent households bear the burden of driving national consumption.

While Southeast Asia's largest economy maintained an overall growth rate above 5%, internal momentum cooled across lower-, middle-, and upper-income segments alike. Data published Thursday, Aug. 13, 2026, in the Regular Economic Update: Indonesia Economic Growth Q2-2026 report by Bank Rakyat Indonesia’s (BRI) Office of the Chief Economist shows that while high earners continue to spend at nearly double the rate of the rest of the country, even their rate of expansion has lost altitude.

The broader implications extend far beyond a quarterly dip. With lower-income earners hampered by stagnant savings and the middle class experiencing its weakest economic momentum in years, Indonesia’s growth engine is becoming precarious. The figures suggest that behind headline economic stability lies a widening consumption divide, where corporate profits and overall demand rely disproportionately on wealthy households and state intervention.

According to BRI’s analytical estimates based on data from Statistics Indonesia (BPS), the Deposit Insurance Corporation (LPS), CEIC, and Bloomberg, economic growth for the lower-income bracket slowed to 3.4% year-on-year in the second quarter from 3.6% in the first quarter of 2026. The middle class decelerated from 3.5% to 3.3%—the lowest rate among all socio-economic groups—while upper-class growth moderated from 8.0% to 7.6%. Overall gross domestic product (GDP) expanded 5.29% year-on-year in the second quarter, down from 5.61% in the preceding three months, as household consumption eased to 5.06% from 5.52%.

Lower Class: Savings Rendered Stationary

The squeeze is felt most acutely at the bottom of the economic pyramid. The lower class’s 3.4% expansion rate sits well below the headline national GDP growth rate and marks a significant retreat from the 4.5% to 4.7% growth rates recorded between 2024 and 2025.

Financial buffers for this group remain minimal. Citing banking deposit data, BRI noted that the average balance for accounts holding up to Rp 100 million ($5,560) hovered near a stagnant Rp 1.7 million ($95) per account. Although overall balance volume grew 5.2% year-on-year, the low baseline figure underscores a minimal capacity to absorb price increases in staple foods, energy, and transportation.

This erosion in purchasing power is reshaping consumer habits. Growth in non-restaurant food and beverage expenditures slowed to 4.25% year-on-year in the second quarter from 4.54% in the first quarter. Meanwhile, discretionary spending on clothing, footwear, and personal care services plummeted to 3.52% from 5.99%, signaling that mass-market household budgets are under severe strain.

Middle Class: The Slowest Engine

The persistent slowdown of the middle class presents the most structural challenge for corporate sales, consumer credit, housing, and automotive markets. Middle-income economic growth slipped to 3.3% in the second quarter, continuing a multi-year decline from 4.9% in 2024 and 4.5% in 2025.

Liquidity indicators offer little immediate prospect of relief. For bank accounts with balances between Rp 100 million ($5,560) and Rp 500 million ($27,800), average deposits held flat at roughly Rp 213.8 million ($11,890) per account.

For the upper-middle segment—accounts holding between Rp 500 million ($27,800) and Rp 2 billion ($111,200)—average balances stood at Rp 930.55 million ($51,750), but deposit growth slowed to 2.5% year-on-year. BRI analysts noted that this slowdown indicates middle-tier households are either drawing down savings to cover living expenses or reallocating capital into alternative investments to preserve yield.

Upper Class: Affluent Buffers Hold the Line

By contrast, upper-class households continue to power discretionary domestic demand, insulated by substantial balance sheet buffers. For bank accounts holding above Rp 2 billion ($111,200), average balances reached Rp 17.48 billion ($972,000) per account, expanding 13.7% year-on-year.

Equipped with this liquidity, affluent consumers kept higher-end service sectors buoyant. Household expenditures on transportation and communication grew 5.71% year-on-year in the second quarter, while hotel and restaurant spending expanded 6.47%.

However, even high earners are not completely immune to broader macro trends. The growth rate for upper-class economic activity moderated by 40 basis points to 7.6% quarter-on-quarter, indicating that top-tier consumption, while robust compared to 2025 levels, is losing speed.

State Spending Steers Headline Expansion

The second-quarter economic performance relies heavily on public sector intervention. Government consumption surged 15.97% year-on-year during the quarter, following a 21.81% jump in the first quarter.

BRI calculations indicate that without state spending, Indonesia’s second-quarter GDP growth would have registered at 4.52% instead of the reported 5.29%—highlighting a 0.77 percentage point contribution from government expenditure. Gross fixed capital formation (investment) rose 6.9% year-on-year, driven by a 26% surge in vehicle investments and a 6.6% rise in construction. However, capital spending on machinery and equipment slowed sharply to 1.3% growth from 7.3% in the prior quarter, pointing to cautious corporate expansion plans.

External economic headwinds further complicated the picture. While exports grew 4.13% year-on-year, imports jumped 8.82%, causing the trade balance to swing from a $5.55 billion surplus in the first quarter to a $1.97 billion deficit in the second quarter, driven largely by a $10.69 billion oil and gas deficit.

Corporate Activity Moderates

The softening of mass-market purchasing power is impacting the broader business environment. BRI’s report categorizes 9 out of 17 domestic economic sectors in contractionary quadrants based on growth velocity and GDP share.

Manufacturing, which accounts for 18.5% of Indonesian GDP, expanded by 4.5% year-on-year, moderating from the previous quarter. Agricultural growth slowed to 3.8% from 5.0%, while the mining sector contracted by 1.6%. Within manufacturing, acceleration was confined to just two out of 16 sub-sectors, with consumer goods and food-and-beverage manufacturing continuing to experience sluggish momentum.

The domestic environment faces additional pressures from elevated energy prices and inflation linked to conflict in the Middle East and global supply disruptions through the Strait of Hormuz. As major trading partners experience economic cooling, domestic policy must focus on strengthening broad-based purchasing power, stimulating private sector investment, and generating high-quality employment to ensure long-term, balanced growth.