The Asian Development Bank has cut its growth forecasts for this year and next in developing Asia because of weakening global demand and a slowdown in the region's two largest economies.

In a report Wednesday, the ADB said emerging Asia should prepare for what it called a “prolonged period of moderate expansion,” which follows years of rapid economic growth in the region.

The Manila-based lender says the unresolved European debt crisis and the looming fiscal cliff in the United States are the biggest threats to Asia's economy.

To adapt, the ADB suggests that developing Asian countries do more to reduce their reliance on exports and support domestic growth.

The Manila-based lender forecasts emerging Asia to grow 6.1 percent this year and 6.7 percent in 2013. Those figures are significantly lower than its previous estimates of 6.9 percent and 7.3 percent.

The bank says the slowdown is most evident in the two regional giants – China and India. China is expected to grow 7.7 percent this year and 8.1 percent in 2013, a sharp drop from the 9.3 posted in 2011. India's growth will slow to 5.6 percent in 2012, down from 6.5 percent a year earlier.

Still, the report said that no major monetary policy interventions were necessary, saying that most countries have enough room to use fiscal and monetary tools to respond in the event of “an extreme shock.”

The bank also said that slower growth is helping to keep prices in check. It expects inflation to fall from 5.9 percent in 2011 to 4.2 percent for both 2012 and 2013.