Update | ADB says Asia's economy to grow at 6.3pc over next two years with India driving expansion

Low commodity prices are set to underpin steady economic expansion across developing Asia through 2016 as India takes China’s place as the region’s fastest-growing major economy, the Asian Development Bank said in its annual outlook for the region on Tuesday.

But that expansion – a projected 6.3 per cent in 2015 and 2016, matching last year’s growth – faced significant challenges should India’s new government fall short on reform, ADB chief economist Wei Shang-Jin said at a press conference in Hong Kong.

A swifter-than-expected uptick in oil prices or interest rates in the US could also sap the drivers of growth in developing markets in Asia.

“If you’re a government official, you shouldn’t completely eliminate the possibility that we will see a stronger-than-expected rebound in commodity prices,” Wei said.

Low commodity prices, namely oil and gas, act as a subsidy to growth for major oil-importing countries such as China and India.

Demand for oil in Asia could fluctuate as countries compete for manufacturing dominance, Wei said. Supply could change as well if, for example, some planned US shale oil production does not take place.

This year could also witness a landmark shift in GDP-generating power from East Asia to South Asia.