Southeast Asia's growth is projected to dwindle to 0.7 percent in 2009, down from 4.3 percent in 2008, and the three most export-orientated economies in the subregion -- Malaysia, Singapore and Thailand -- will also contract, with the most open of these economies, Singapore, likely to shrink by 5 percent.

South Asia, though not as open to trade as other regional economies, is also expected to lose steam. India's growth slowed to 7.1 percent for 2008, well below the torrid 9 percent growth of recent years, and it is expected to fall further to 5 percent in 2009 as the intensifying crisis further dents business and consumer confidence and causes a major reduction in capital inflows.

Growth in Central Asia will drop to 5.7 percent in 2008, down from 12 percent in 2007, and is expected to decelerate further to 3.9 percent in 2009. Oil producing nations are being hurt by the fall in oil prices, while declining remittance flows pose a risk to the smaller countries in the subregion.

Economic expansion in the Pacific Islands is anticipated to slow to about 3 percent in 2009, largely as a result of the subregion's biggest economy, Papua New Guinea, slipping after two years of strong growth driven by the commodity boom.

ADB said that the region's slowdown underlines the risks of excessive dependence on external demand, and developing Asia must adopt a mix of policies that will bolster demand and use resources more efficiently.

"Rebalancing growth is in developing Asia's interest. A more balanced approach can boost social welfare by using its savings more productively and help to reduce global imbalances that helped feed the current crisis," Lee said.

Export-led growth has delivered enormous benefits for the region, and will continue to do so in the coming years, ADB said. However, developing Asia's large and persistent current account surplus is an integral part of the global imbalances that underlie the current global financial crisis.

ADB laid down a set of policies to build strong demand in the region, including transferring more corporate savings to households, reducing the precautionary motive for savings among households and enhancing the investment climate, among others.

"Undertaking the required reforms will facilitate developing Asia's return to its high growth path, and help protect the region from future external shocks," Lee said.

The bank also said a concerted global effort is required to tackle global imbalances. Greater regional cooperation will help buffer the region against even large external shocks such as the current crisis, it added.

(Xinhua News Agency March 31, 2009)