Growth in developing Asia faced strong headwinds in the first half of 2015. Regional growth is forecast to slow from 6.2% in 2014 to 5.8% in 2015, with a slight rebound to 6.0% in 2016.

The region must strengthen its ability to respond to external shocks. Emerging markets are facing receding capital flows and depreciating currencies—a trend that may be exacerbated by the upcoming rise in US interest rates. Implementing macroprudential policies and developing local currency bond markets can bolster financial system resilience and mitigate risks to borrowers.