In a supplement to its Asian Development Outlook 2016 report released last March, ADB now forecasts 2016 growth for the developing economies at 5.6%, below its previous projection of 5.7%.

For 2017, the growth is seen unchanged at 5.7%.

“Although the Brexit vote has affected developing Asia’s currency and stock markets, its impact on the real economy in short term is expected to be small,” said Shang-Jin Wei ADB’s Chief Economist.

“However, in the light of tepid growth prospects in major industrial economies, policy makers should remain vigilant and be prepared to respond to external shocks to ensure growth in the region.”

The latest report said growth in 2016 and 2017 led by South Asia, and India in particular, continues to expand strongly, while China is on track to meet earlier growth projections.

Meanwhile, South Asia is expected to be the fastest growing sub-region led by India, whose economy has shrugged off global headwinds and is on track to meet ADB’s March fiscal year 2016 (year to March 2017) projected growth target of 7.4% supported by brisk consumer spending and an uptick in its rural economy, it said.

In Pakistan, the report said, further improvements in energy supply, higher infrastructure investments and an improved security environment will help push up growth in 2016 and 2017 while the Bangladesh economy will remain robust on the strength of its garment sector.

In Southeast Asia, growth projections for the sub-region in 2016 and 2017 will remain unchanged at 4.5% and 4.8% with solid performances by most economies in the first half of 2016 driven by private consumption.

The exception was Vietnam where the economy came under pressure from a worsening drought that caused a contraction in the agriculture sector.

In East Asia, despite muted activity in Hong Kong, China and the Republic of Korea, growth forecasts are unchanged at 5.7% in 2016 and 5.6% in 2017 while the world’s second largest economy, China is on track to meet its projected growth of 6.5% in 2016 and 6.3% in 2017, accroding to the report.

It said continued soft commodity prices and recession in the Russian Federation have further dampened the growth outlook for Central Asia, with the earlier 2016 forecast of 2.1% trimmed to 1.7%, and 2017 cut to 2.7% from 2.8%.

It added that the slump in revenues from hydrocarbon exports are affecting fiscal consolidation efforts in Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan, while lower remittance, particularly from the Russian Federation, continue to hurt domestic consumption in the sub-region.

In the Pacific, growth for 2016 is expected to moderate to 3.9% in 2016 from 7.1% in 2015, with the Fijian economy reeling from Cyclone Winston. However, there are some bright spots with stronger-than-expected tourism receipts aiding the Cook Islands and Samoa, while Vanuatu’s economy is being boosted by the roll-out of post-cyclone reconstruction work and other major infrastructure projects, it said.

The report now projects inflation for developing Asia to come in at 2.8% for 2016 and 3.0% for 2017—a 0.3 percentage point rise for each year from the previous forecasts. The rise is due largely to a recovery in oil and food prices. Oil prices rebounded from early-year lows and food prices rose nearly 9% in June 2016 from the year earlier, marking the fifth consecutive month the index has risen in value.