MANILA, Dec. 13 -- The Asian Development Bank (ADB) has raised its economic forecast for developing economies in Asia and the Pacific after robust domestic demand drove higher-than-expected growth in economies like China, according to a new ADB report released on Wednesday.

The Asian Development Outlook December 2023 forecasts China's economy to expand 5.2 percent this year, compared with a previous forecast of 4.9 percent, after household consumption and public investment boosted growth in the third quarter.

The regional economy is projected to grow 4.9 percent this year, compared with a previous forecast of 4.7 percent in September. The outlook for next year is maintained at 4.8 percent.

The growth outlook for India has been raised to 6.7 percent from 6.3 percent following faster-than-expected expansion in July-September, driven by double-digit growth in the industry.

The report says that the upgrades for China and India more than offset a lowering of the forecast for Southeast Asia, caused by lackluster performance in the manufacturing sector.

The growth outlook for Southeast Asia this year has been lowered to 4.3 percent from 4.6 percent amid weak demand for manufacturing exports.

The outlook for economies in the Caucasus and Central Asia has been raised slightly, while projections for Pacific economies are unchanged.

Risks to the outlook include persistently elevated interest rates in the United States and other advanced economies, which could contribute to financial instability in vulnerable economies in the region, especially those with high debt.

"Developing Asia continues to grow at a robust pace despite a challenging global environment," said ADB Chief Economist Albert Park.

"Inflation in the region is also gradually coming under control. Still, risks remain, from elevated global interest rates to climate events such as El Nino. Governments in Asia and the Pacific need to remain vigilant to ensure that their economies are resilient and that growth is sustainable," Park added.

The region's inflation outlook for this year has been lowered to 3.5 percent from an earlier projection of 3.6 percent. For next year, inflation is expected to edge up to 3.6 percent, compared with a previous forecast of 3.5 percent.

The report warned that potential supply disruptions caused by the El Nino weather pattern or the Russian-Ukraine conflict could also rekindle inflation, particularly regarding food and energy.