The Asian Development Bank raised its growth forecasts for China and India on Tuesday and said the region is leading a global recovery but warned against ending stimulus efforts too quickly.
The bank raised its 2009 growth forecast for China from its 7.2 percent outlook in March to 8 percent, and India from 5 percent to 6 percent. The regionwide forecast was raised from 3.4 percent to 3.9 percent.
"Developing Asia is leading the recovery from the global downturn," the Manila-based bank said in a report on 44 economies stretching from Pakistan to South Korea to Fiji.
The growth forecasts for Hong Kong and Indonesia also were raised, though the outlooks for Taiwan, Thailand and Malaysia were lowered. Developing Asia excludes Japan.
But the bank cautioned that a prolonged global downturn could slow a recovery for the trade-dependent region and warned governments against exiting too quickly from stimulus measures.
"Pulling away the carpet of fiscal and monetary support before the recovery has a firm foothold may lead to a double-dip decline instead of the expected V-shaped rebound," the report said.
China is carrying out a 4 trillion yuan ($586 billion) stimulus that is meant to reduce reliance on exports by pumping money into the economy through spending on construction of roads and other public works.
Singapore, Hong Kong, South Korea and other governments have similar measures.
The ADB's optimism was a turnabout from its decision in March to slash its growth outlook for the region.
The downturn is Asia's worst since the 1997 financial crisis and was driven by the collapse in Western demand for electronics, cars and other exports that are critical to its economic growth.
Economies covered by the ADB report grew by 6.3 percent last year and 9.5 percent in 2007.
The bank called on Asian governments to lower barriers to trade and financial flows within the region to reduce reliance on Western export markets.
"To strengthen its economic resilience and sustain its development, developing Asia must adopt policies to broaden the scope and structure of its openness to trade, capital flows, and movement of work," the report said.
