Disaster in Iran’s Economy: Internet Outage Causes Negative Economic Growth – Part Two
Disaster in Iran’s Economy: Internet Outage Causes Negative Economic Growth. Experts believe that the livelihood of more than 10 million Iranian citizens has faced serious threats over the past two weeks due to internet outages. Business owners are also deeply concerned about the possibility of a permanent internet shutdown in the country or the continuation of social media filtering, including Instagram.
Observers believe that the behavior of Ebrahim Raisi’s government over the past two weeks indicates inclinations towards making the internet outage permanent or at least enforcing some of the recent restrictions. Reports recently published about the government’s approach to limiting Iranian users’ access to the internet show that some officials in Raisi’s government have directly orchestrated extensive actions to intensify these restrictions. Experts also express concern, stating that the risk posed by the continuation of the government’s policies to virtual businesses is much higher than previously imagined.
Iran Gate, in the third part of its series of reports examining the damage caused by internet outages to Iran’s economy, has calculated the destruction of the country’s economic infrastructure following the implementation of policies to restrict and filter the virtual space. According to these calculations, the promise of 8% growth under such conditions, where more than 11 million people have practically lost their businesses, is nothing but a dream.
Farewell to Economic Growth
According to Iran Gate’s calculations, the internet business sector in Iran, which directly supports the livelihood of 11 million people, accounts for about 8% of Iran’s total GDP. In other words, it can be said that by cutting off the internet and filtering social networks, the Raisi government has not only endangered the livelihood of 11 million Iranians but has also effectively shut down about 10% of Iran’s entire economy.
This is while Raisi and the members of the thirteenth cabinet have repeatedly promised to achieve 8% growth for Iran’s economy. Although experts believed that even when these slogans were being made, achieving 8% growth was not possible, it seems that with the government’s new approach to widespread internet outages, even the smallest chance of achieving this growth has been eliminated.
This is why many believe that by imposing widespread internet restrictions, Raisi has practically paved the way for saying goodbye to his grandiose slogan of achieving significant economic growth. Some also believe that if user access restrictions in the virtual space continue in the medium and long term, there is even a possibility of negative economic growth.
Because with this action, the government will disable one of the driving motors of the economy, which has been independent and dynamic, and this action by the thirteenth government will undoubtedly turn into an economic disaster that will affect not only 11 million people but all Iranian citizens.
What Will Happen to Knowledge-Based Companies?
The current situation in Iran has severely alarmed many investors in startup and knowledge-based sectors. This is while the government has repeatedly emphasized the need to strengthen the knowledge-based sectors of the economy and has even allocated substantial budgets to some so-called knowledge-based companies. Most experts believe that the budget that the Raisi government has so far allocated to some companies labeled as knowledge-based is akin to pouring national wealth into a bottomless pit that has produced no clear or tangible output for the Iranian nation. This approach by Raisi has not only failed to pave the way for the country’s economic prosperity but has also not been able to provide a solution for the government itself.
Many specialists believe that the Islamic Republic’s goal in investing in sectors it calls knowledge-based is to create a platform for imposing more restrictions in the virtual space. Restrictions aimed at preventing the free flow of information, with clear signs of this seen in various companies and institutions, including the Communications Infrastructure Company and Abr Arvan.
However, looking at the general public’s reception of domestic knowledge-based products indicates the government’s failure in this area. In fact, it should be said that the government has not only spent the country’s resources against Iran’s national interests but has also failed to gain any specific benefit for itself. Now, it is unclear what the government’s stance will be regarding this large number of knowledge-based companies.
Companies that have no stable income and only rely on the generous hand of the Raisi government—a government that not only cannot meet the expectations of these entities but is also unable to cover its current expenses and is facing an unprecedented budget deficit in the history of Iran’s economy.
The Impact of Permanent Instagram Filtering on the Economy
Yesterday, the Minister of Communications in Raisi’s government also warned businesses operating on social networks to transfer their activities and investments to similar domestic platforms. Many observers interpreted this warning by Issa Zarepour as the government’s intention to permanently filter Instagram. Indeed, evidence of such an intention has been observed in recent days, including suspicious movements by state media to create an atmosphere for restricting Instagram access for Iranian users, which is among the most significant.
Economists believe that given the inefficiency of domestic platforms and the significant share of virtual businesses, of which Instagram is a key component, this could mean an economic disaster in the medium and even short term. As mentioned, such an approach will not only likely lead to negative economic growth but will also impose new heavy costs on the government.
Costs that, under current conditions, cannot be covered by stable income sources. Therefore, the government will practically be forced to borrow from the Central Bank’s resources, directly or indirectly, which will result in nothing but a sharp and sudden inflation spike in a short period.
In truth, it must be said that by intensifying filtering and internet outages, the Raisi government has not only disrupted the livelihood of more than 11 million people but has also brought a large economy like Iran to the brink due to the significant share of internet businesses. A brink that undoubtedly has beneficiaries, who have recently appeared as the main encouragers of the government to impose even more restrictions in the virtual space.
The previous part of this article, titled ‘Who Benefits from Internet Outages?’ has been published.
Additionally, Iran Gate has exclusively analyzed and reviewed internet outages.
- What is the Cost of Instagram Filtering and Internet Outages?
- Who is Stepping on Iran’s Internet Cable?