MANILA - GROWTH in Asia's developing economies will hit the slowest pace this year since the 1997/98 financial crisis, but the world's fastest growing countries may rebound in 2010, the Asian Development Bank said.

The forecast for 2010 was however contingent on a mild recovery in the global economy, and this was far from certain, the Manila-based ADB said in its annual Asian Development Outlook released on Tuesday.

Asia in better shape than 1997 Despite the gloom, the ADB said, the region was in a much better position to tackle the slowdown than it was in the 1997 Asian Financial Crisis, which pummelled the region's currencies and economies. Robert Prior-Wandesforde, a senior Asia economist at HSBC bank, said the current downturn was as severe as that in 1997 but that the region was expected to rebound more quickly. ... more Reduce reliance on exports IN LINE with the global response to the crisis, Asian central banks have slashed interest rates and governments are trying to spend their way out of the slump. Some are also trying to keep their economies flush with dollars through foreign exchange swaps. Japan, for example, is to unveil a new stimulus package on Tuesday to create jobs and spur demand. ... more

The multilateral development bank also urged Asian countries to use the crisis as an opportunity to rebalance growth from their reliance on exports towards strengthening consumption at home as a way towards sustained growth.

'There are tremendous downside risks to this global outlook,' ADB President Haruhiko Kuroda said in the report.

'The effectiveness of the global responses to the crisis remains uncertain. Loud calls for protectionist policies are becoming worrisome. As job losses in the major industrialised countries continue, the protectionist voices may only get louder.'

The ADB said Asia's developing economies, which include China, India, the economies of Southeast Asia, South Korea and Central Asia, should register average GDP growth of 3.4 per cent this year, down from 6.3 per cent in 2008. It is its lowest forecast since growth averaged only 0.2 per cent in 1998.

The ADB said average growth in Asia could recover to 6.0 per cent in 2010 if big industrialised nations pull out of recession.

The forecasts by and large confirm a Reuters poll of economists earlier this month that showed that growth in Asia will fall sharply this year and could recover next year.

'The concern for the region, and especially for the region's poor, is that it is not yet clear that the United States, European Union and Japan will recover as soon as next year,' said the ADB's acting Chief Economist Jong-Wha Lee said in the report.

As late as December, the ADB had forecast that average growth in Asia would reach 5.8 per cent in 2009. But it said: 'The global downturn is having a pronounced impact on the region's exports and subdued domestic demand will further crimp growth.' -- THOMSON REUTERS