Economy hit by internet shutdown: study

Online services, freelancers feel brunt of disruptions, says PIDE report

ISLAMABAD:

A recent study conducted by the Pakistan Institute of Development Economics (PIDE) has unveiled startling findings concerning the economic consequences of internet shutdowns in Pakistan.

According to the findings, a 24-hour suspension of internet services leads to a substantial financial setback of Rs1.3 billion, equivalent to a remarkable 0.57 per cent of the nation's daily GDP average. This eye-opening revelation is part of PIDE's research infographic titled "The Economic Cost of Internet Closure" and highlights the severe consequences of internet shutdowns on the Pakistani economy.

PIDE Vice Chancellor Dr Nadeemul Haque and research fellow Mohammad Shaaf Najib co-authored the report which notes that Pakistan's internet infrastructure lags behind in terms of both quality and coverage.

According to the report, the recent internet closure in various parts of Pakistan has had a profound impact on multiple sectors, leading to substantial financial losses and operational challenges. Online cab services, online food delivery services, freelancers, transport companies, and postal services were severely affected by the prolonged disruption of internet services.

The infographic shows that online cab services, a cornerstone of modern transportation, saw a staggering 97 per cent reduction in the number of rides on days when the internet had been closed down. This significant downturn equates to a loss of Rs29 million to Rs32 million for the industry per day.

Similarly, online food delivery services suffered a 75 per cent reduction in the number of orders, translating into a substantial daily loss of Rs135 million.

Meanwhile, the freelance community, which contributes significantly to Pakistan's economy, has also felt the brunt of internet disruptions. Denial of orders to Pakistan-based freelance workers resulted in over $3 million loss of revenue, equalling Rs390 million, impacting the livelihoods of many and the national economy as a whole too.

Besides, the suspension of 3G/4G services for a single day caused a loss of Rs450 million to the telecommunication sector alone.

Furthermore, PIDE had earlier estimated the economic costs of protests to be around two per cent of the GDP. Closure of economic activity either through protests or due to the closure of internet services contributes to a significant loss of economic activity in the country.

In a statement, Dr Haque said utilising online tools for education and professional purposes can empower youth from rural regions to compete on a national and international level.

 

Published in The Express Tribune, October 9^th, 2023.