Vietnam's GDP may slow up to 0.5 per cent due to Typhoon Yagi

The areas that bore the brunt of direct damage from Typhoon Yagi include key manufacturing and tourism hubs such as Haiphong and Quang Ninh (Halong Bay), while the subsequent flooding also affected export centres such as Bac Ninh, Bac Giang, and Thai Nguyen to some extent. MUFG's base case is that the bulk of the disruptions should be resolved within 2–3 months, though the rebuilding and replacement of assets are likely to take some time.

Nonetheless, the economic importance of the broader Red River Delta and northern regions poses downside risks to MUFG's views, especially if the weather and flooding takes a turn for the worse. As an initial assessment, MUFG lowered its 2024 GDP growth forecast to 5.8 per cent (from 6.1 per cent previously) with a rebound to 6.8 per cent in 2025 (from 6.5 per cent).

The Red River Delta and northern cities and provinces where the typhoon hit are certainly economically significant areas of Vietnam. The two provinces bearing the direct brunt of the Typhoon’s immediate impact – Haiphong and Quang Ninh (where Halong Bay is located) - make up 6.5 per cent of GDP, 8.9 per cent of exports, and 12.6 per cent of cumulative registered foreign direct investment since 2018, coupled with 5.9 per cent of total retail sales.

The subsequent rains and flooding from the Red River that came after it also affected other key manufacturing and export related provinces such as Bac Ninh, Bac Giang and Thai Nguyen to varying degrees, which combine to make up 12 per cent of GDP and 29 per cent of exports. Together, the Red River Delta and northern cities and provinces collectively make up 38 per cent of GDP and 55 per cent of exports.

Initial assessments by the government suggest that the typhoon may reduce 2024 GDP by 0.15 per cent. Minister of Planning and Investment Nguyen Chi Dung said that GDP growth in the third quarter and fourth quarter could decrease by 0.35 per cent and 0.22 per cent respectively, with around $1.63 billion in damage to fixed assets such as infrastructure and factories.

The typhoon severely damaged factories, with many roofs blown off and walls torn and collapsed in key industrial zones such as Haiphong. Fully getting production back on track may take weeks or months, even as companies are busy rebuilding.

Halong Bay in Quang Ninh has reopened for tourism, and that efforts are intensifying to clean up the iconic site. Nonetheless, tourism more broadly in the Northern areas could take a hit in the near-term given uncertainty around possible landslides and safety concerns.

Typhoon Yagi estimated to cause $1.6 billion in damage for Vietnam An estimated $1.6 billion in damages has been incurred due to Typhoon Yagi, with a projected 0.15 per cent reduction in Vietnam’s GDP for 2024.

UK provides $1.3 million to tackle Typhoon Yagi impact in Vietnam The UK government has announced £1 million ($1.3 million) of humanitarian assistance to Vietnam to support the initial phase of the response to the impact of Typhoon Yagi.

New Zealand provides NZ$1 million aid to support Vietnam The New Zealand government has announced a NZ$1 million contribution to support Vietnam’s recovery from the devastating impacts of Typhoon Yagi.