Indonesia has achieved a substantial reduction in extreme poverty over the past four decades, demonstrating that major improvements in living standards are possible across different developing economies. Estimates cited in a comparative analysis show that the share of Indonesians living below the international extreme-poverty threshold fell from approximately 86% in 1984 to less than 4% by 2025.

China is widely recognised for its rapid reduction in extreme poverty, but Indonesia’s experience highlights how economic development and improved living conditions have also transformed millions of lives elsewhere.

According to the figures presented in the analysis, Indonesia’s progress reduced the number of people living in extreme poverty from around 140 million to approximately 10 million. Although the country did not replicate China’s precise trajectory, the scale of the decline represents a major change in the country’s socioeconomic conditions.

China’s Transformation and the Global Poverty Decline

China experienced a dramatic fall in extreme poverty following decades of economic transformation. In the early 1980s, more than 90% of its population was estimated to live below the poverty threshold used in the comparison. By the early 2020s, the proportion had fallen to almost zero under that measure.

Economic expansion, agricultural reforms, industrial development, infrastructure investment and targeted poverty-reduction programmes all played roles in China’s transformation.

However, the global decline in extreme poverty cannot be attributed to China alone. Countries across Asia and other regions have also made significant progress through different combinations of economic growth, employment expansion, public investment and social programmes.

Indonesia provides an important example of this wider trend.

How Indonesia Reduced Extreme Poverty

Indonesia’s poverty reduction has taken place alongside substantial changes in its economy and society. The expansion of manufacturing, services, urban employment and infrastructure has created new opportunities for many households.

Improvements in agricultural productivity and access to markets have also helped support rural incomes. Public programmes addressing education, healthcare and social protection have contributed to efforts to improve household welfare.

Nevertheless, poverty reduction has not been uniform across the country. Regional inequalities, informal employment, vulnerability to economic shocks and differences in access to essential services continue to affect living standards.

The decline in the number of people below the extreme-poverty line also does not mean that every household has achieved financial security. Families living just above the threshold can remain vulnerable to rising prices, illness, job losses and natural disasters.

Understanding the International Poverty Line

The comparison uses an international extreme-poverty threshold of less than $3 per person per day. This is a very low benchmark intended to identify severe deprivation rather than determine whether people can afford a comfortable standard of living.

International poverty lines are adjusted for differences in purchasing power between countries, so they should not be interpreted simply as the amount of US dollars a person can exchange locally each day.

The figures therefore measure progress against a specific international standard. They do not capture every dimension of poverty, including access to quality education, adequate housing, healthcare, sanitation and economic security.

Assessments using higher poverty thresholds can provide a broader picture of how many people continue to experience financial hardship.

Why Poverty Measurement Matters

Tracking poverty across different thresholds helps governments and researchers understand both the progress achieved and the challenges that remain. A country can reduce extreme poverty substantially while still having millions of people who struggle to meet everyday needs.

Indonesia’s experience illustrates why development assessments should consider multiple indicators, including household income, consumption, employment quality and access to public services.

The comparison with China also demonstrates that poverty reduction can occur through different economic and policy pathways. There is no single model that every country can reproduce without considering its own institutions, population, geography and economic circumstances.

The broader lesson is that sustained improvements in living standards require continued attention to employment, productivity, education, infrastructure and social protection.

Indonesia’s reported decline in extreme poverty is a significant development indicator, while the remaining challenge is to ensure that economic progress translates into lasting improvements for households across the country.