The Philippines and the other Asian emerging economies will grow faster this year compared to last year, according to a latest report from the Asian Development Bank (ADB).
The ADB's 2013 Asian Development Outlook, released in Hong Kong on Tuesday, said that after relatively muted growth last year, when the region expanded by 6.1 percent, developing Asia is expected to pick up speed again with growth of 6.6 percent this year and 6.7 percent next year.
But in its report, the ADB also cautioned that developing Asia' s recovery phase remains vulnerable to shocks.
"Strong capital inflows could feed asset bubbles. Political discord surrounding fiscal debates in the United States, austerity fatigue in the euro area, and border disputes in Asia could jeopardize macroeconomic stability," the ADB said.
According to the report, growth was expected across the region, with China's GDP forecast to expand 8.2 percent this year, higher than last year's growth of 7.8 percent, on strong domestic demand and a better export performance.
South Asia's growth would turn around after two years of softening, the ADB said. It forecast that India's GDP growth will accelerate from last year's 5 percent to 6 percent this year.
"India has considerable potential, but its future performance relies on resolving contentious structural and policy issues that inhibit investment," the bank said.
For the Philippines, the ADB has raised its growth forecast to 6 percent from 5 percent this year on expectations of increased investment inflows after the country earned its first-ever investment grade from Fitch Ratings Agency.
For 2014, the ADB said the country was expected to remain strong and grow 5.9 percent.
Neeraj Jain, ADB country director, said that governance reform and prudent management under the administration of Philippine President Benigno Aquino III have laid the foundation for strong economic growth.
The ADB growth forecast for 2013 and 2014 for the Philippines, however, are lower than the 6.6 percent GDP growth last year. The Aquino administration is targeting 6 percent-7 percent GDP growth this year and 6.5 percent to 7.5 percent for 2014.
Elsewhere in the region, the ADB said that faster growth in China -- by far the region's largest economy -- and what the ADB called the "remarkable" resilience of southeast Asian economies have been the main drivers of growth.
Echoing ADB's view, the Paris-based Organization for Economic Cooperation and Development (OECD) also said in its 2013 economic outlook that the rise in domestic demand, particularly private consumption and investment, would be the main driver of growth in Asia, adding that growth would be less dependent on exports.
The OECD said that Indonesia will likely lead the pace in the region over the next five years, growing about 6.3 percent a year from 2013-2017 as it reaps the rewards of economic reforms and infrastructure investment.
With China and India included, the OECD expects emerging Asia to grow 7.4 percent by 2017, a bit slower than in the years leading up to the financial crisis.
China's economy should continue to grow by more than 8 percent a year despite slowing demand for Chinese exports, slower expansion of workforce and decreasing productivity gains, the OECD report said.
The report also said that capital inflows will pose " significant macroeconomic policy challenges" to Southeast Asian governments.
According to the OECD, high savings rates in Singapore, Malaysia, the Philippines and Thailand should drive robust growth, but it cautioned that these countries risk falling into a "middle- income trap" as they find it more difficult to maintain the rapid productivity gains of recent years.
In its report, the ADB issued a stark warning on Asia's rapidly growing energy needs, saying that the region is moving along a " dangerously unsustainable energy path" that could result in environmental disaster and wider gap between the rich and the poor.
The ADB said that there is a need for the Asian emerging economies to craft new measures on energy security in order to prevent such dire consequences.
An ambitious plan by the Association of Southeast Asian Nations regional bloc to create a common, barrier-free market by 2015 would encourage even higher growth and help to diversify its market, the ADB report added.