general internet slowdown in Pakistan has severely disrupted economic activity in several sectors, leading to significant losses. Freelancers, who make up over 500,000 workers, have experienced a sharp decline in productivity, resulting in missed deadlines and lost international clients. Reports indicate that up to $300 million in potential freelance business has been lost due to these disruptions. Larger businesses, employing hundreds or thousands of people, are facing contract cancellations. Some of their foreign clients are considering relocating operations. The tech sector, which contributes approximately $3.2 billion in annual exports, risks losing a significant share of the market if the situation continues, further jeopardising the country’s long-term digital competitiveness.

The Telecom Operators Association has warned that if these disruptions persist, Pakistan could lose up to Rs 12 billion annually due to reduced daily internet traffic, which has decreased by approximately 6,400 terabytes. This loss would place a substantial financial strain on the sector. As a result, the government could face an additional Rs 3 billion annual losses to the national exchequer due to the reduced telecom sector revenue.

Several explanations have been offered by the authorities to explain the ongoing internet slowdown in Pakistan. Yet, these have only added to public scepticism. The Pakistan Telecommunication Authority initially attributed the problem to a fault in two submarine cables, one of which is expected to be repaired by early October. Meanwhile, Shaza Fatima Khawaja, the minister of state for information technology, pointed to the strain caused by widespread VPN use, exacerbated by a prolonged ban on social media platform X. Additionally, there has been ongoing speculation about the role of firewalls, with many in the business community and among internet service providers alleging that the government’s efforts to monitor and control internet traffic have contributed to the slowdown.

These disruptions have broader implications, affecting foreign direct investment, the blue-collar workforce and critical sectors like IT and freelancing, which are key contributors to Pakistan’s exports. If the problem is not addressed, the economic damage could have lasting consequences for Pakistan’s GDP and set back its global competitiveness.

The extended disruption in Pakistan’s internet services, now expected to persist until early October, poses a severe threat to the country’s already modest digital economy. The IT industry contributes just 1.5 percent to Pakistan’s GDP—far less than India, where the sector comprises 10 percent of GDP. A prolonged slowdown could widen this gap. The e-commerce sector, which generated $5.2 billion in revenue in 2023, and the rapidly growing freelancing industry, integral to the livelihoods of many Pakistanis, are particularly vulnerable. The persistent internet issues have already disrupted the workflow for freelancers, many of whom depend on stable connections to engage with international clients. This disruption not only risks immediate revenue losses but also threatens to stifle long-term growth in a sector critical for enhancing Pakistan’s global digital competitiveness. The potential for prolonged outages to erode investor confidence and push businesses, particularly multinationals and tech startups, to relocate or avoid Pakistan could have lasting repercussions, further constraining the nation’s economic recovery and digital advancement.

These disruptions have broader implications, affecting foreign direct investment, the blue-collar workforce and critical sectors like IT and freelancing, which are key contributors to Pakistan’s exports.

The government’s denial of a deliberate throttling of the internet, despite ongoing upgrades to its web management system for cybersecurity, has aggravated public distrust. This could significantly undermine investor confidence. Pakistan is already in a precarious position, desperately seeking foreign investment to stabilise its economy, as evidenced by the establishment of the Special Investment Facilitation Council aimed at fast-tracking and protecting foreign investments. The internet slowdown has cast a shadow over these efforts, causing potential investors to worry that Pakistan’s digital infrastructure may not be as reliable as needed for modern business operations. This is particularly troubling at a time when the country is trying to present itself as a viable destination for foreign direct investment in sectors like IT, agriculture and energy. The unpredictability of internet access raises serious concerns about Pakistan’s readiness to handle the demands of a digitally-driven global economy, making it less attractive to both current and potential investors. This not only jeopardises the inflow of much-needed capital but also hampers the country’s efforts to improve its economic standing on the international stage.

The internet slowdown in Pakistan is having a disproportionately negative impact on women, many of whom have increasingly turned to social media platforms to pursue economic activities and gain financial independence. Across the country, women have been leveraging social media to build small businesses, engage in influencer marketing and access new markets, often operating from their homes. This digital empowerment has allowed them to overcome traditional barriers and participate more actively in the economy. The ongoing internet disruptions are jeopardising these opportunities, making it difficult for women to maintain their online presence, engage with clients and sustain their business activities. The slowdown threatens to reverse the progress made in digital entrepreneurship among women.

Is the economic loss from internet slowdown likely to concern the ruling elite in Pakistan? The country has a history of allocating resources to sustain elite interests while neglecting the broader population’s needs. This pattern is evident in the power sector’s ongoing inefficiencies and theft, costing over Rs 5 trillion; and in the chronic underinvestment in human capital that has left Pakistan ranked 164th on the Human Development Index. Privileged groups, including the corporate sector and large land owners, already extract around $17.4 billion annually through tax breaks and preferential access. The $300 million loss from internet disruptions might seem negligible in comparison. In a country where vast sums are routinely lost to elite capture and poor governance, will such economic damage even matter to those in power?

The ongoing internet crisis in Pakistan highlights the critical need for a more comprehensive and transparent digital policy that ensures both cybersecurity and uninterrupted access. While technical faults may be unavoidable, the government’s approach to managing the internet must be carefully considered. Efforts to stifle dissent by restricting access could prove counterproductive, especially at a time when the country faces a sharp surge in militancy in Balochistan and widespread public discontent due to heavy taxation and rising costs of necessities.

The writer is a tenured associate professor and heads the Department of Economics, COMSATS University Islamabad, Lahore Campus