Islamabad, Pakistan -- Pakistan's government is throttling the internet and social media while it tests new controls to crush dissent, activists and business leaders say, putting the country's economic recovery at risk.

Internet networks have been up to 40 percent slower than normal since July, according to one IT association, while documents, images and voice notes have been disrupted on WhatsApp, used by tens of millions of people.

Digital rights experts believe the state is testing a firewall -- a security system that monitors network traffic but can also be used to control online spaces.

"The Internet slowdown is due to the installation of a national firewall and content filtering system by the state aimed at increasing surveillance and at censoring political dissent, especially the criticism of the security establishment for its interference in politics," digital rights expert and activist Usama Khilji told AFP.

The authorities appear to be targeting WhatsApp because of its end-to-end encryption capabilities, which enable users to securely share information without it being accessed by any third-party, he added.

The government, which analysts say is backed by the military, and the telecommunications authority, run a by a retired general, for weeks refused to comment on the slowdown.

It was the defense minister who finally acknowledged what millions of Pakistanis nationwide had already guessed.

"We are undergoing a transition after which all these facilities will be available to you," Khawaja Muhammad Asif told media this week.

"But there will be some controls to prevent threatening and defamatory content against the state and individuals," he added, without confirming whether those controls were part of a firewall.

As the backlash grew, IT minister Shaza Fatima Khawaja denied on Sunday that the government was behind the internet slowdown, which she claimed had lasted "for one or two days".

"A large part of the population has begun using VPNs. When you operate on VPN, it creates pressure on live internet, and you see a slowdown," she said at a news conference.

Pakistan's telecommunications authority declined to comment when contacted by AFP.

It comes as Pakistan's military -- the country's most powerful institution -- says it is battling so-called "digital terrorism".

Regular rallies have been held this year demanding the state do more to tackle militant violence in the border regions with Afghanistan, while protesters in southwestern Balochistan have rallied over alleged rights abuses by authorities in their crackdown on separatist groups.

But analysts say the main target of the digital disruption is the party of jailed opposition leader Imran Khan, still wildly popular and boosted by a young, tech-savvy voter base.

Prominent Pakistani journalist Hamid Mir has launched a legal challenge against the government over "the apparent installation of a firewall" at Islamabad High Court, which is due to hear the case on Monday.

After years of political instability, Pakistan's economy is locked in a cycle of IMF bailouts and loan rollovers from neighbors.

Desperate for foreign investment to unlock stunted growth, the country is adding to its economic woes by disrupting internet service, business leaders warn.

The firewall's "inexplicable opacity and ambiguity" is sapping Pakistan's economic potential and could cost its IT sector up to $300 million, according to the Pakistan Software Houses Association, which represents IT firms.

Shahzad Arshad, head of the Wireless & Internet Service Providers Association of Pakistan, warned that if "this continues, we will see a mass exodus of businesses from Pakistan".

He added that connectivity had slowed by up 40 percent over the past month.

But even as authorities throttled connectivity and WhatsApp access, Pakistan's Punjab province splashed out last week on adverts in New York's Times Square -- trying to sell itself as an "IT city".

"Even if a firewall is necessary for security, trials could have saved the livelihoods of thousands of freelance software developers and avoided damage to Pakistan's credibility as a reliable supplier of IT/IT-enabled services," Ehsan Malik, CEO of the Pakistan Business Council said Saturday.

AFP has contacted WhatsApp parent Meta for comment.

Activists have long criticized the government's censorship and control of the internet and media, shrinking an already limited space for free speech in the conservative country.

The social media platform X has been banned in Pakistan since the election, when it was used to air allegations of poll rigging against Khan's party, which was kept from power by a military-backed coalition.

The party's social media team has also been targeted by arrests and detentions.

Shahzad Ahmad, head of the independent digital rights watchdog Bytes for All in Pakistan, said the firewall was largely designed to give the government control of the internet.

"We believe that the firewall will create distrust among IT investors in Pakistan... and will also compromise citizens' fundamental rights."