This photo taken on Sept 2, 2010 shows the logo of the Asian Development Bank (ADB) displayed outside its headquarters in Manila. (PHOTO / AFP)

MANILA - Economic growth of developing economies in Asia and the Pacific is projected to remain solid, although risks to the outlook are rising, according to an Asian Development Bank (ADB) report released on Wednesday.

The Asian Development Outlook September 2023 forecasts the region's developing economies to grow 4.7 percent this year, a slight downward revision from a previous projection of 4.8 percent. The growth forecast for next year is maintained at 4.8 percent.

Developing Asia continues growing robustly, and inflation pressures are receding, said ADB Chief Economist Albert Park 

The report says that growth in the region was upbeat in the first half of this year, driven by China's reopening, healthy domestic demand, rebounding tourism, strong remittances, and stable financial conditions, even as a weaker global outlook reduced export demand.

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The report forecast China's growth at 4.9 percent this year from 5 percent in April's report, showing ADB's confidence in the health of its largest economy member.

Rebounding tourism, resilient service sectors, healthy money transfers into the region, and improving financial conditions are all helping support economic activity, and inflation is receding in most economies after peaking last year.

"Developing Asia continues growing robustly, and inflation pressures are receding," ADB Chief Economist Albert Park told a press conference.

Among the developing Asia's subregions, Southeast Asia's growth outlook is cut to 4.6 percent this year from an earlier projection of 4.7 percent due to weaker export demand; South Asia is also lowered by 0.1 percentage points, to 5.4 percent; East Asia is cut to 4.4 percent from 4.6 percent.

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The report raised the growth forecast for the Caucasus and Central Asia to 4.6 percent, and the Pacific to 3.5 percent.

However, the report warned that high global interest rates have increased the risk of financial instability. Sporadic supply disruptions from the continuing Russian-Ukraine conflict, export restrictions, and the increased risk of droughts and floods caused by El Nino could once again trigger rising food prices and challenge food security.

Park said that some central banks in the region have started to lower interest rates, which will help boost growth. Governments need to be vigilant against the many risks that the region faces, warning that downside risks to the outlook have strengthened, Park added.

Inflation is projected to continue declining towards pre-pandemic levels, from 4.4 percent in 2022 to 3.6 percent this year and 3.5 percent next year, Park said.

"This is largely due to low inflation in China, along with steadying food and energy prices," says the report.