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The Asian Development Bank says East Asia's economic upturn is firmly on track, so extraordinary fiscal and monetary stimulus should be gradually withdrawn.
The Manila-based bank raised its growth forecast for the region from 7.7 percent to 8.1 percent. ADB says headline inflation increased across the region, but remained low and manageable.
ADB also outlined three major risks - a disruption in the recovery of advanced economies, destabilizing capital flows and unintended policy errors. But it says financial turbulence and uncertainty, exemplified by the European sovereign debt crisis, also suggests that risk appetite could change dramatically.
ADB also notes that China's recent move to allow more flexibility in the yuan could see an appreciating exchange rate mitigate inflation pressures, and slow the pace of rate raises.