Understanding the Difference Between Poverty Figures from the World Bank and Statistics Indonesia

Jakarta, (1/5) – In early April 2025, the World Bank, through its Macro Poverty Outlook, reported that in 2024, over 60.3% of Indonesia’s population—or around 171.8 million people—were living below the poverty line. On the other hand, official data from Statistics Indonesia (BPS) showed that the poverty rate as of September 2024 was 8.57%, or about 24.06 million people. While this difference appears significant, it's important to understand that the two figures are not contradictory. The gap is due to the use of different poverty line standards and the distinct purposes they serve.

The World Bank uses three poverty line standards to monitor global poverty and compare poverty levels between countries:

• The international poverty line at US$2.15 per person per day for extreme poverty.

• US$3.65 per person per day for lower-middle income countries.

• US$6.85 per person per day for upper-middle income countries.

These poverty lines are expressed in PPP dollars (Purchasing Power Parity), which adjust for differences in cost of living between countries. The PPP value of one US dollar in 2024 was equal to Rp5,993.03.

The 60.3% poverty rate in Indonesia was based on the US$6.85 PPP standard, which represents the median poverty line across 37 upper-middle income countries. It does not reflect the specific basic needs of the Indonesian population. The World Bank also encourages each country to calculate a national poverty line that fits its unique social and economic conditions.

Although Indonesia is now classified as an upper-middle income country (UMIC) with a Gross National Income (GNI) per capita of US$4,870 in 2023, the country only recently moved into this category and is still near the lower threshold of the UMIC range (which spans from US$4,516 to US$14,005). As a result, applying the World Bank's global standard for upper-middle income countries yields a higher poverty count.

BPS measures poverty using the Cost of Basic Needs (CBN) approach. The poverty line is defined by the minimum amount of money needed to meet essential food and non-food needs. The food component assumes a daily intake of 2,100 kilocalories per person and includes common items like rice, eggs, tofu, tempeh, cooking oil, and vegetables, reflecting typical Indonesian consumption. The non-food component includes housing, education, healthcare, clothing, and transportation.

The poverty line is calculated using data from the National Socioeconomic Survey (Susenas), which collects information on household expenditures and consumption. Susenas is conducted twice a year. In 2024, it covered 345,000 households in March and 76,310 households in September. Importantly, the survey measures at the household level, not individual level, because consumption usually occurs collectively within households.

Therefore, the poverty line calculated by BPS reflects the real needs of the Indonesian people. BPS also publishes poverty data in detail by region—provinces and cities/regencies—and distinguishes between urban and rural areas. In September 2024, the national poverty line was Rp595,242 per capita per month. However, since spending occurs within households, not individuals, the average poor household (with 4.71 members) had a poverty line of Rp2,803,590 per household per month. This varies across provinces. For instance:

• In Jakarta, it was Rp4,238,886;

• In East Nusa Tenggara (NTT), Rp3,102,215;

• In Lampung, Rp2,821,375.

These differences reflect variations in cost of living, living standards, and consumption patterns in each region.

It is important to interpret poverty line data carefully. The poverty line is an average figure and doesn't consider personal characteristics like age, gender, or job type. For example, Jakarta's per capita poverty line in September 2024 was Rp846,085/month. If a household has five members (e.g., two parents and three toddlers), it would be misleading to assume each person needs the same amount. Because consumption is shared, the more accurate approach is to look at the household poverty line, which in this case is Rp4,230,425/month. This gives a better picture of the household’s economic condition.

By correctly understanding the poverty line concept, we can see that poverty should not be simplified as income per person and certainly not judged by whether someone earns only Rp20,000/day.

Lastly, it’s important to note that people living above the poverty line are not automatically well-off or wealthy. There are different economic groups above the poor, such as:

• Vulnerable to poverty (1.0–1.5 × poverty line),

• Emerging middle class (1.5–3.5 ×),

• Middle class (3.5–17 ×),

• Upper class (>17 ×).

As of September 2024:

• Poor: 8.57% (24.06 million people),

• Vulnerable to poverty: 24.42% (68.51 million),

• Emerging middle class: 49.29% (138.31 million),

• Middle class: 17.25% (48.41 million),

• Upper class: 0.46% (1.29 million).