The ADB nudged up its 2024 growth forecast for Developing Asia to 4.9% from 4.8% projected in December, but warned of persistent challenges such as rising geopolitical tensions, including in the Middle East, that could disrupt supply chains and reignite inflation.

The Manila-based lender's 2024 growth forecast was slightly weaker than the region's 5.0% growth in 2023. Growth for 2025 was also forecast at 4.9%.

"Growth in developing Asia will remain robust this year, in spite of uncertainty in the external environment," ADB Chief Economist Albert Park said in the Asian Development Outlook report.

"The end of interest-rate hiking cycles in most economies as well as continued recovery in goods exports from an upturn in the semiconductor cycle will support growth," Park said.

China remains a weight on the regional growth outlook as a protracted property crisis and other challenges keep the world's No.2 economy from mounting a strong economic revival, the ADB said.

ADB Principal Economist John Beirne, in a briefing ahead of the report's release, said Wednesday's cut by Fitch of its outlook on China's sovereign credit rating to negative was concerning for investor sentiment.

"It can have additional problems that are already apparent in the property sector, and certainly it's not helpful when we consider local government debts and sustainability of debt and cost of sovereign borrowing," Beirne said.

The ADB forecast China would grow 4.8% in 2024. That is higher than its 4.5% estimate made in December, but slower than growth of 5.2% in 2023.

It expects the Chinese economy to lose more steam next year, with growth seen slowing to 4.5%, "driven by the weak property market and amplified by fading domestic consumption growth after last year's reopening", the ADB said.

The ADB forecast regional inflation would slow to 3.2% in 2024 from 3.3% in 2023, and ease further to 3.0% in 2025.