The Asian Development Bank, or ADB, on Tuesday lowered its growth outlook for developing Asia, citing slower growth in China and subdued demand from advanced economies.

In its latest Asian Development Outlook Supplement, the ADB said it expects the region to grow 6.3 percent in 2013 and by 6.4 percent in 2014. These forecasts were lower than April's prediction of 6.6 percent growth for 2013 and 6.7 percent for 2014.

"Continued tepid demand from the major industrial economies coupled with slower growth in the People's Republic of China are weighing on the outlook for developing Asia," the Manila-based lender said in the report.

The bank also trimmed the growth forecast for China. Developing Asia's largest economy is now forecast to expand 7.7 percent this year, weaker than the 8.2 percent growth forecast in April. The outlook for 2014 was cut to 7.5 percent from 8 percent predicted previously.

"The drop in trade and scaling back of investment are part of a more balanced growth path for PRC, and the knock-on effect of its slower pace is definitely a concern for the region," ADB Chief Economist Changyong Rhee said in the report. "But we are also seeing more subdued activity across much of developing Asia."

The report noted that China's import and export growth has slowed given weak external demand. However, the lender noted that consumer confidence remained robust. Slower growth in China has subdued the outlook for the entire East Asia region and to a lesser extent, for Southeast Asia, the report pointed out.

The ADB also slashed its forecast for India, citing slow progress in pushing through economic reforms, slowing fixed capital formation and weak industrial activity. The Indian economy is seen expanding 5.8 percent this year, slower than the previously forecast 6 percent. However, the ADB maintained its 2014 forecast of 6.5 percent.

In Japan, the ADB said, the package of monetary and fiscal reforms dubbed Abenomics seems to be bearing fruit. The growth forecasts for the Japanese economy was revised up to 1.8 percent from the 1.2 percent forecast in April.

However, the lender maintained its 2014 growth outlook for Japan at 1.4 percent, citing the impending value-added tax rate increase.

Elsewhere in South Asia, Sri Lanka continues to grow strongly while the other parts of the region will see softer than anticipated growth, the report said.

The ADB also trimmed forecasts for Central Asia, reflecting the sluggish economic performance of Kazakhstan and Georgia. The growth forecasts for Pacific were also cut, with Timor-Leste seeing a slowdown in government spending.

Additionally, the ADB cut its inflation outlook for developing Asia as slow economic growth helped to contain demand-side inflationary pressure in the region. Declining energy and food prices, given slower global demand for fuels and bumper grain harvests, are also keeping inflation subdued, it said.

Inflation in developing Asia is forecast to dip to 3.5 percent in 2013 from the 3.7 percent in 2012. The projected rate was lower than the 4 percent forecast in April. The inflation outlook for 2014 was also lowered to 3.7 percent from 4.2 percent expected previously.

RTTNews