The surging economies of Southeast Asia have been a bright spot in developing Asia's otherwise subdued 2012 growth performance.

But the broader region should still pick up steam in 2013, says a
new Asian Development Bank (ADB) report.

The latest Asian Development Outlook Supplement, released today also stated that Malaysia and the Philippines outstripped expectations, with strong third quarter performances boosting ASEAN-5 growth forecasts from 5.6 per cent to 5.9 per cent.

It said developing Asia will post growth of 6.0 per cent in 2012 and 6.6 per cent in 2013, a 0.1 per cent percentage point lower than anticipated by the ADB in October.

Robust private consumption in Southeast Asia and a mild economic recovery in China nearly balance out the weaknesses in India's economy.

The report warns that ongoing sluggishness and uncertainty in Europe and the United States mean that risks to the forecasts remain firmly on the downside.

ADB Chief Economist Changyong Rhee said: "Enduring debt problems and economic weakness in Europe and the looming fiscal cliff in the United States remain very real threats to developing Asia next year.

"At the same time, there are highly encouraging signs from Southeast Asia, and recent data from China confirms a bottoming out of the economy, with industrial output rebounding to a five-month high in October."

Third quarter expansion in the Philippines was a stellar 7.1 per cent, more than double the rate from the same period a year earlier.

This performance and the recovery in China, supported by a turnaround in industrial production and retail sales and solid fixed investment, are helping to offset weakness in other East Asian economies, including Hong Kong, China, Korea and Chinese Taipei.

India's economy remains sluggish, with sliding industrial production and declining exports.

Growth in Central Asia is also soft, pulled down by difficulties in its two largest economies ― Azerbaijan and Kazakhstan.

The report said Pacific economies, led by resource-rich Papua New Guinea, the Solomon Islands and Timor-Leste, is continuing to benefit from infrastructure roll outs which should support growth of six per cent in 2012, but the expansion will moderate in 2013.

Inflation remains broadly benign across most of the region as a result of price declines in some food commodities, including soybean and palm oil.

Inflationary pressures remain a concern in South Asia, however, with the sub-region expected to post an annual inflation rate of 8.3 per cent in 2012.

An expected spike in meat prices, lower output of grains, and higher global demand, will see inflation for developing Asia tick up to 4.2 per cent in 2013, from a revised rate of 4.0 per cent in 2012. Bernama