A "robust recovery" was the norm across most emerging East Asian economies this year, with many of the region's stock markets bouncing back sharply, the Manila-based bank said in the December edition of its twice-annual Asia Economic Monitor.

However, the bank's forecast for 2010 remained below the region's record 9.6 percent economic expansion in 2007.

"After slowing sharply in 2008 and 2009, the East Asian economies recovered strongly in 2010 which has led GDP growth back closer to 2007 levels," the bank said.

Hong Kong, China, Thailand, the Philippines, Korea and Singapore are among the 14 economies analysed in the report.

East Asia continued to lead the global recovery, with many of its economies posting "strong growth in the third quarter of 2010, driven by domestic demand," the report said.

But the external environment has weakened owing to the wobbly US economy and the phasing out of economic stimulus packages, it said.

China's economy expanded by 9.6 percent in the third quarter, but there were signs that growth was starting to ease, the bank said.

Singapore, the region's fastest growing economy, moderated to 10.6 percent in the third quarter after two consecutive quarters of "rapid growth".

However the report warned that East Asia's economic outlook remains "highly uncertain" given the weaker external environment and uncertain effects of further monetary stimulus in advanced economies.

Critics have warned that the US Federal Reserve's 600-billion US dollar fiscal stimulus package could spark a flood of hot money into the region.

"A weaker- and longer-than-expected recovery process in advanced economies will further delay policy normalization, increasing economic distortions and lowering long-term growth prospects," the report said.

It also noted that capital flows into the region could become volatile and destabilising, creating challenges for policymakers.

Battling surging capital flows "will require an appropriate mix of sound macroeconomic management, flexible exchange rates, resilient financial systems, and in some cases -- temporary targeted capital controls," the report added.

The bank warned that the "severe economic damage caused by the Great Recession will take a long time to heal".

"High unemployment could become entrenched and last for many years... Growth in productivity could also suffer as capital investment plummeted during the crisis and has not returned to pre-crisis trend growth," the bank said.

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