Developing Asia's economic growth will slow in 2009 to its most sluggish pace since the 1997/1998 Asian financial crisis, the Asian Development Bank (ADB) said on Tuesday, urging the economies to "rebalance" growth to counter external shocks.

In its flagship annual economic publication, Asian Development Outlook 2009, the Manila-based bank said that economic growth in developing Asia will slide to just 3.4 percent this year, down from 6.3 percent last year and 9.5 percent in 2007. If the global economy experiences a mild recovery next year, the outlook for the region will improve to 6 percent in 2010, it added.

Deteriorating economic prospects will hinder the efforts to reduce poverty, ADB said. With the slow growth, more than 60 million people in 2009, and close to 100 million people in 2010, will remain trapped in poverty -- living on less than US$1.25 a day.

"The short term outlook for the region is bleak as the full impact of the severe recession in industrialized economies is transmitted to emerging markets," ADB Acting Chief Economist Jong-Wha Lee said in a press release.

Despite the dismal outlook, ADB said that the region is in a much better position to cope with the ongoing global crisis than it was in 1997/98.

Large foreign currency reserves and steadily declining inflation rates will provide policymakers with the necessary tools to nurse their economies through the hard times ahead, said the development bank.

Many Asian governments have already responded quickly to the crisis with appropriate financial, monetary and fiscal policies and so far the impact on financial stability has been limited, it added.

Meanwhile, ADB warned that there are significant downside risks to the global outlook, which could further impact on the already gloomy regional outlook.

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, Lee said.

Economic growth in East Asia will slow to 3.6 percent in 2009, down from 6.6 percent in 2008 and a blistering 10.4 percent in 2007. While the Chinese mainland is expected to expand by 7 percent in 2009 on the back of massive fiscal stimulus measures rolled out by the government, three economies in the subregion -- South Korea, and China's Hong Kong and Taiwan -- are likely to contract as their economies are hit hard by a sharp drop in demand for exports. ADB forecasts that in 2009 South Korea will record -3percent growth; Hong Kong, -2 percent growth; and Taiwan -4 percent.