According to the Asian Development Bank, developing countries in Asia will see their benefits of higher demand from recovering advanced economies offset by a slowdown in China’s economy.

According to the Manila based bank’s annual Asian Development Outlook, the region’s gross domestic product is forecast to grow 6.2% in 2014 and 6.4% in 2015 up from 6.1% in 2013. Moderating growth in China as its economy adjusts to more balanced growth will offset to some extent the stronger demand expected from the industrial countries as their economies recover.

China’s economy is expected to slow to 7.5% in 2014 and 7.4% in 2015 from 7.7% in 2013 as policies promoting more sustainable, equitable and balanced growth are implemented.

While risks have declined, the report warned policymakers to watch out for excessive credit expansion curbs in China, a faltering in the recovery of the industrial economies and a shock to global financial markets from changes in US monetary policies.

Despite developing Asia’s steady growth, it lags other region in public spending on education, health care and social protection. The bank urged policymakers to boost revenue generating measures to fund targeted subsidies and anti-poverty projects.

Public spending on education averages 5.3% of GDP (gross domestic product) in the advanced economies, 5.5% in Latin America but only 2.9% in Asia. Developing Asia only spends 2.4% on health care, compared to 8.1% in advanced economies and 3.9% in Latin America.

For social protection, the region allocates 6.2% while advanced economies spend 20 per cent and Latin America 12%. Due to China’s economy moderating, East Asia’s growth will remain flat at 6.7% until 2015.

India’s projected recovery of 5.5% in 2014 and 6% in 2015 will boost South Asia’s GDP to 5.3% this year and 5.8% next year. Labour tensions in Cambodia and political unrest in Thailand are restraining growth in South East Asia, where GDP growth is projected to be flat at 5% in 2014.