The Asian Development Bank expects developing economies in Asia as a whole to grow a strong 6.6 percent this year. However, the ADB says there are large regional differences, and rising oil prices are a potential threat to the overall strong trend.
In its Outlook 2005 Update report, the Asian Development Bank paints a varied picture for this year.
The economic giants, China and India, are forecast to continue their rapid expansion. China is expected to grow by 9.2 percent - up from the ADB's forecast in April of 8.5. The prediction for India, whose fiscal year ends next March, remains at 6.9 percent
But Southeast Asian growth has been downgraded to 5 percent, from 5.4. ADB chief economist Ifzal Ali cites a number of factors.
"Of course there is the problem associated with higher oil prices, but the downturn in the electronics cycle has hurt Malaysia and the Philippines," he explained. "We've witnessed that Thailand and the Philippines have suffered from drought in the earlier part of this year. And Thailand has also suffered from the insurgency that is going on in the southern part of the country."
Mr. Ali notes that oil prices have risen almost 75 percent across the region since the start of 2005, and he says signs of strain are starting to show. Import bills are up sharply, oil shortages are increasing, and currency reserves are starting to fall in some countries.
He predicts, however, that the Asian economies will adjust in time.
"This rapid rise in oil prices is one of the most worrisome, and this is what Asia will have to adjust to very quickly," he said. "We are confident that this adjustment will be carried out, because the strong fundamentals in developing Asia today enable reforms to continue."
Developing Asia has a large appetite for oil. The ADB says it produces about 11 percent of the world's crude, but consumes more than 20 percent.
The ADB report also says a successful political transition and an improving investment climate are expected to lift growth in Indonesia, and strong growth is expected to continue in Vietnam.