People use ropes to remove fallen trees following the impact of Typhoon Yagi, Hai Phong, Vietnam. (Reuters Photo)

HANOI- Typhoon Yagi, Asia’s most powerful storm this year, cost Vietnam roughly $1.6 billion and may cut into the country’s growth rate, according to preliminary estimates from the investment ministry.

Vietnam’s economic growth in 20ao the impacts of the typhoon, a report from the ministry said. It had previously forecast a 6.8 percent -7 percent expansion this year. 

Among the hardest hit sectors are agriculture, forestry and fishery, where growth may decrease by 0.33 percent, the ministry said, whereas industry and construction may see a smaller impact of 5 basis points.

However, highly industrialized areas, such as the provinces of Thai Nguyen, Haiphong, may grow slower by 0.5 percent as they bore the brunt of the typhoon, the ministry said.

The typhoon, which made landfall on Sept. 7, killed at least 292 people and left 38 missing as of Monday morning, according to data from Vietnam’s disaster agency.

“GDP growth in the third quarter and fourth quarter could decrease by 0.35 percent and 0.22 percent respectively compared to the scenario without Typhoon Yagi,” according to the ministry report.

Floods have also inundated 190,000 hectares (469,500 acres) of rice fields, 48,000 hectares of cash crops such as corn and cassava and damaged nearly 232,000 houses in northern Vietnam, according to the disaster agency.

Haiphong City, home to several industrial parks, recorded about 11 trillion dong ($448.43 million) of losses and damage from the typhoon, the city said.

In a separate statement released by the government, Vietnam said it strived to control inflation and reach gross domestic product growth of about 7 percent this year despite the hit from Typhoon Yagi.

Vietnam’s economic growth accelerated in the second quarter on robust exports, government data showed earlier, but rising inflation remained a challenge for the Southeast Asian country.

Gross domestic product is estimated to have expanded to 6.93 percent in the second quarter from a year earlier, faster than a growth of 5.87 percent in the first quarter, the government’s General Statistics Office (GSO) said.

The economy expanded 6.42 percent in the first half of this year, the GSO added.

Vietnam, an important exporter of smartphones, electronics and garments, is seeking to shore up business activity after missing last year’s growth target because of weak global demand and power shortages.

“Vietnam’s socio-economic situation continues a positive trend, with each quarter being better than the previous one,” the GSO said in a statement.

“The country’s economy and society continue to face many difficulties and challenges, amid external risks and uncertainties … achieving the growth target of 6.0-6.5 percent in 2024 is a big challenge, requiring the joint efforts from all forces,” the GSO added.

Vietnam’s exports in the first half of this year rose 14.5 percent from a year earlier to $190 billion, while industrial production increased 10.9 percent from a year earlier, according to the GSO.

Prime Minister Pham Minh Chinh said second-quarter GDP growth exceeded the first quarter’s pace, and said policy would continue to prioritise growth to meet this year’s growth target of 6.0 percent-6.5 percent.

Chinh said Vietnam would stick to its flexible monetary policy, with an aim of further cutting banks’ lending interest rates, reducing fees and boosting public investment.

The International Monetary Fund expects Vietnam’s economic growth to be close to 6 percent this year, supported by strong external demand, resilient foreign investment and accommodative policies, but has warned that downside risks are high.

The IMF said that if exchange rate pressures were to persist for longer it could lead to a larger pass-through to Vietnam’s domestic inflation, given easy monetary conditions.

Inflation pressures are building, with Vietnam’s consumer prices in June rising 4.32 percent from a year earlier, nearing the government’s inflation target ceiling of 4.5 percent for the year.