Lanka, best performing economy in South Asia -ADB

Sri Lanka continues to grow strongly while other parts of the South Asian region will see softer than anticipated growth, says a new Asian Development Bank Report released last week.

Continued tepid demand from the major industrial economies coupled with slower growth in China are weighing on the outlook for developing Asia, says the ADB's latest Asian Development Outlook Report.

The Report trimmed its 2013 growth forecast for the 45 developing member countries of ADB to 6.3 percent and cut its 2014 forecast to 6.4 percent. In April, the ADB had predicted the region to grow by 6.6 percent this year and 6.7 percent next year.

"The drop in trade and scaling back of investment are part of a more balanced growth path for China, and the knock-on effect of its slower pace is definitely a concern for the region. But we are also seeing more subdued activity across much of developing Asia," said ADB Chief Economist Changyong Rhee.

China - home to developing Asia's largest economy - is likely to see its economy expand 7.7 percent this year and 7.5 percent in 2014 after a growth of 7.8 percent in 2012. The report notes that import and export growth has slowed due to weak external demand, but notes continuing robust consumer confidence. Slower growth in the People's Republic of China has subdued the outlook for the entire East Asia region, as well as, to a lesser extent, for Southeast Asia, where the Philippines and other large ASEAN countries are otherwise seeing solid growth. In India, meanwhile, slow progress in pushing through the reforms needed to ease business bottlenecks means growth is likely to be 5.8 percent this year, slower than the previously forecast six percent. ADB maintains its 2014 forecast of 6.5 percent for 2014.

Elsewhere in South Asia, Sri Lanka was the most promising economy. The report has also trimmed forecasts for Central Asia, reflecting the sluggish economic performance of Kazakhstan and Georgia, and for the Pacific where Timor-Leste is seeing a slowdown in government spending.