Despite last year’s achievement in obtaining the upper middle-income status, Indonesia fell back into the World Bank's lower-middle-income country classification this year. 

As reported by Bloomberg, The World Bank downgraded Indonesia’s status as of July 1, as the country only managed to generate $3,870 in gross national income per capita this year. Last year, Indonesia obtained an upper-middle-income status with GNI per capita of $4,050. In addition, Indonesia’s gross domestic product shrank 2.1% last year as the country fell into its first recession since the Asian Financial Crisis in 1998. 

The COVID-19 pandemic is seen as the reason behind this regress. Finance Ministry's Fiscal Policy Agency Head Febrio Kacaribu said in a press release that the decline in Indonesia’s income per capita was an unavoidable consequence of the pandemic. “The pandemic led to negative economic growth across almost all countries, including Indonesia,” he stated.

The pandemic has led to shuttered businesses, pay cuts and job losses, dragging as many as 2.75 million more Indonesians below the poverty line as of last September. Unemployment rate has increased to 8.75 million as of February, with more than 1.5 million people losing their jobs due to the pandemic.