Islamabad, October 9, 2023 – A comprehensive study conducted by the Pakistan Institute of Development Economics (PIDE) has shed light on the significant economic impact of internet shutdowns in Pakistan.
According to the study, a 24-hour shutdown of internet services results in a direct loss of Rs 1.3 billion, which accounts for approximately 0.57 percent of the country’s daily GDP average.
Released as part of PIDE’s research infographic titled “The Economic Cost of Internet Closure,” this study underscores the far-reaching consequences of internet shutdowns in the nation. It emphasizes the critical role that the internet now plays in modern life, even as it highlights the deficiencies in Pakistan’s internet infrastructure in terms of both quality and coverage.
Recent internet closures in various parts of the country have reverberated across multiple sectors, leading to substantial financial losses and operational challenges. Several key sectors have been adversely affected, including online cab services, online food delivery services, freelancers, transport companies, and postal services.
The PIDE Infographic unveiled some staggering statistics:
Online Cab Services: On days when internet services are suspended, online cab services experience a staggering 97% reduction in the number of rides. This dramatic downturn translates into a daily loss of Rs 29 to 32 million for the industry.
Online Food Delivery Services: The study revealed that online food delivery services suffer a 75% reduction in the number of orders when the internet is disrupted, resulting in a significant daily loss of Rs 135 million.
Freelancers: The freelance community, which significantly contributes to Pakistan’s economy, has been hit hard by internet disruptions. Denial of orders to Pakistan-based freelance workers has resulted in over $1.3 million in lost revenue, equivalent to Rs 390 million. This not only impacts the livelihoods of many but also affects the national economy as a whole.
Telecommunication Sector: The suspension of 3G/4G services for a single day alone causes a loss of PKR 450 million to the telecommunication sector.
Furthermore, the study found that economic closures, whether due to protests or internet service disruptions, contribute to a significant loss of economic activity in the country, with PIDE estimating the economic cost of protests to be around 2.0% of the GDP.
Dr. Nadeem ul Haque, Vice Chancellor of PIDE, emphasized the importance of access to high-quality internet. He noted that it not only provides opportunities for youth, especially in remote areas but also plays a pivotal role in bridging the gap between the privileged and the general public. Utilizing online tools for education and professional purposes can empower youth from rural regions to compete on a national and international level, he added.
This study highlights the critical need for a stable and reliable internet infrastructure in Pakistan, as internet access increasingly becomes integral to daily life and economic growth.
