HANOI (Reuters) – Vietnam’s gross domestic product contracted 6.17% in the third quarter of 2021 from a year earlier as pandemic restrictions hit, the sharpest quarterly decline on record, government data released on Wednesday showed.

According to the General Statistics Office (GSO), the services sector saw a 9.28% decrease in value compared with the same period a year ago. Meanwhile, industrial and construction sectors fell by 5.02%. Agriculture grew by 1.04%.

In a statement, the GSO explained that “The COVID-19 Pandemic severely affected all areas of the economy with many important production cities and provincials having to impose strict locksdowns.”

GSO usually releases data prior to the end of the reporting period, and data are often subject for revision. From 6.61%, the growth in quarter 2 was revised down by 6.57% to 6.57%.

Vietnam, which had managed to contain the virus throughout most of 2013, has struggled with an increase in cases and deaths since April. There were 770,000 infections and 18936 deaths. Most victims are located in Ho Chi Minh City (the country’s main business centre) and its industrial neighbours.

Authorities have imposed strict restrictions in Vietnam’s major cities and provinces and forced companies to stop production.

After pressure from businesses and investors warning that restrictions could lead to a departure from Vietnam, the government began taking steps towards easing the lockdowns.

Although the government has set a target of 6.5% growth in GDP this year, a minister said earlier this month that it could go up to 3.5%-4.0%.

According to analysts, monthly activity data suggests that things may have improved.

Oxford Economics wrote in a note, “We expect to see a substantial pick-up during the fourth quarter. Production will quickly normalize due to higher vaccine rates among manufacturing employees. We also anticipate an increase in imports.”

The GSO stated that supply-chain and logistical problems were an issue and it was reducing its 5.4% 2021 forecast.

According to the GSO, around 90,000 companies shut down operations or declared bankruptcy between January and September. There were 32,400 of these businesses that had to be dissolved. This is 17.4% more than a year ago.

The unemployment rate increased to 3.43% from 2.40% during the second quarter, according to it.

GSO estimates that exports to September fell 0.6% to $27 billion, while the industrial production index decreased 5.5%.