Asian Development Bank (ADB) has cut its outlook for developing Asia, citing slower growth in China and India.
The bank added that concerns over the US scaling down a key stimulus measure, the quantitative easing (QE) programme, will also affect the region’s growth.
Speculation over the US scaling back the programme has seen many investors pull out money from the region.
The ADB has cut its growth forecast for the region, which includes 45 nations, to 6% for 2013, from 6.6%.
“Asia and the Pacific 2013 growth will come in below earlier projections due to more moderate activity in the region’s two largest economies and effects of QE nervousness,” said Changyong Rhee, chief economist of the ADB.
The bank also revised down the growth forecast for the region for 2014 to 6.2%, from its earlier projection of 6.7%.
Call for reforms
China, Asia’s largest economy, has seen its growth hit by a decline in demand for exports from key markets such as the US and Europe.
Its growth rate has slowed for two quarters in a row.
Over in India, a slowdown in sectors such as manufacturing, coupled with a lack of reforms in key areas, has seen the country’s growth hit its lowest level in a decade.
In its latest report, the bank also warned that growth in South East Asia will be hampered by weak performances in Thailand, Indonesia and Malaysia, due to weak exports from these economies.
The bank said that the slowing growth “highlights the need to push ahead with overdue reforms in areas like foreign direct investment, infrastructure development, fiscal consolidation and social protection programs” in the region’s economies.
It said that these reforms were key to sustaining the long-term growth of the region.