Recently, a social media post circulated an infographic claiming that Indonesia is the second-poorest country in the world. The infographic stated that Indonesia’s poverty rate is 60.3 percent, below Zimbabwe’s 84.2 percent, and that the data were allegedly sourced from the World Bank. The post has raised questions among many observers, particularly those concerned with poverty issues.
Dr. Wisnu Setiadi Nugroho, a lecturer at the Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM), also responded to the post. As a scholar focusing on Poverty and Inequality Alleviation/EQUITAS, he refuted the information presented in the infographic.
According to him, the World Bank has never issued any document, whether through the Global Poverty Line, the Poverty and Inequality Platform (PIP), or the Macro Poverty Outlook, stating that Indonesia is the second-poorest country in the world.
“The narrative does not originate from the World Bank, but rather from a misunderstanding and misapplication of purchasing power concepts,” he said at FEB UGM on Thursday (Feb. 12).
Dr. Nugroho explained that the World Bank measures international poverty using a poverty line based on Purchasing Power Parity (PPP), for example, USD 2.15 PPP per capita per day. This figure must not be converted using the current market exchange rate.
However, many social media infographics mistakenly multiply the USD PPP value by the market exchange rate of the rupiah (approximately IDR 16,000 per USD). In fact, the correct conversion should use Indonesia’s PPP conversion factor, which is approximately IDR 4,700–5,300 per USD PPP.
“As a result, the poverty line becomes almost three times higher. The number of poor people is severely distorted, leading to extreme claims such as more than 60 percent of Indonesia’s population being poor,” he explained.
So, is Indonesia truly prosperous?
He noted that, according to the World Bank’s definition, Indonesia’s extreme poverty rate is relatively low. However, Indonesia has a very large vulnerable population group that lives economically close to the poverty line.
Based on various data from Statistics Indonesia (Susenas), if the national poverty line were increased to approximately 1.5 times its current level, the proportion of people categorized as poor and vulnerable could exceed 50 percent of the population.
This means that more than half of Indonesia’s population may not be classified as poor statistically, but they are highly susceptible to falling into poverty due to rising food and energy prices, health shocks, job loss, or reduced working hours, which can quickly push them below the poverty line.
“In welfare economics discourse, this group is often referred to as the near-poor or economically vulnerable, and its size is significantly larger than the official poverty rate,” he said.
Dr. Nugroho further explained that there are many approaches to determining whether a country can be considered rich or poor. Currently, Indonesia’s national poverty line is still based on a minimum basic needs approach, particularly minimum caloric requirements and essential non-food needs such as housing, clothing, and basic education.
However, many researchers argue that this threshold does not fully reflect today’s standard of living because it does not adequately account for current needs. These include reasonable transportation costs, internet and communication access, adequate, non-overcrowded housing, and protection against risks such as savings and social security.
Regarding global rankings, Wisnu emphasized that the World Bank does not officially rank the poorest countries. In fact, Indonesia is classified as an upper-middle-income country, and its extreme poverty rate is far lower than that of low-income countries in Sub-Saharan Africa.
“Indonesia is clearly not among the poorest countries in the world, let alone the second poorest. However, vulnerability remains a major challenge. Moreover, Indonesia is currently experiencing a middle-class squeeze, with fewer people moving up the economic ladder and more slipping into lower-income groups,” he added.
Reporter: FEB UGM/Kurnia Ekaptiningrum
Author: Agung Nugroho
Post-editor: Jasmine Ferdian
Photographs: Tagar.id and FEB UGM