Indonesia poverty assessment: pathways towards economic security

Indonesia can build on its impressive track-record of poverty reduction to tackle more ambitious poverty reduction targets. Indonesia has made impressive gains in reducing poverty, with previously lagging regions catching up, and the Government’s goal to eliminate extreme poverty by 2024 practically met. As an aspiring upper middle-income country, however, Indonesia may want to widen its focus beyond extreme poverty by moving from the US$ 1.90 2011 PPP poverty line to higher lines for middle-income countries. The focus should also include economically insecure households susceptible to falling back into poverty. Is Indonesia’s current effort ready for this challenge? Human capital outcomes are disappointing and worrying geographic disparities remain. Low productivity still prevents households from becoming economically secure. Shocks, including from climate change, continue to threaten reversal in poverty gains. In this report the authors identify several major pathways to tackle these challenges in a comprehensive and sustainable manner.