Vietnam's meteorological agency issued the downgrade on Sunday but cautioned about the ongoing risk of flooding and landslides as the storm, the strongest to hit the country in decades, moved westwards.
On Saturday, Yagi disrupted power supplies and telecommunications in Vietnam's capital, Hanoi, causing extensive flooding, felling thousands of trees and damaging homes.
At least 18 people have been killed as Vietnam is hit by floods and landslides after Typhoon Yagi. (AP PHOTO)
The typhoon and subsequent landslides killed 18 people in Vietnam with many still reportedly missing at sea, according to preliminary estimates from the government and state media, after claiming the lives of four people on the southern Chinese island of Hainan and 20 in the Philippines, the first country it hit a week ago.
In Haiphong, a Vietnamese coastal city of two million which hosts factories of several multinationals, industrial parks remained closed on Sunday, workers and managers told Reuters.
One was flooded, and workers said they had been sent home after they tried to go to work unaware of the conditions at their plants because telecommunications networks had not been restored.
"The damage for the factories is really significant," said Bruno Jaspaert, head of DEEP C industrial zones, which host plants from moe than 150 investors in Haiphong and the neighbouring province of Quang Ninh.
"Some have lost roofs or entire front facades."
He said at least 80 per cent of the factories had been damaged but the industrial parks had not been flooded.
"It might take a month if things go well before I fully recover from this damage," said Do Van Truong, a 45-year-old shop owner in Haiphong, noting the ceiling of his seafood shop had collapsed while power and water supplies had not yet been restored.
Typhoon Yagi has caused highway closures and power outages in northern Vietnam. (AP PHOTO)
Several highways in the north of the country were flooded or seriously disrupted, state media reported, publishing pictures and footage of landslides.
After it made landfall in Vietnam on Saturday afternoon, Yagi triggered waves as high as four metres in coastal provinces, leading to extended power and telecommunication outages that have complicated damage assessment, the government said.Â
The meteorological agency warned of continued "risk of flash floods" in riverside areas including in Hanoi.
As winds subsided, authorities in Hanoi rushed to clean up streets, with toppled trees scattered across the city centre and other neighbourhoods.
"The storm has devastated the city," 57-year-old Hanoi resident Hoang Ngoc Nhien said.
"Trees fell down on top of people's houses, cars and people on the street."
Hanoi's Noi Bai international airport, the busiest in northern Vietnam, reopened on Sunday after closing on Saturday morning.
