The World Bank has raised its growth forecast for developing eastern Asian and Pacific economies in 2010. But it's added its voice to the growing chorus of caution, about the potential fallout from a flood of cash into the region.

The World Bank's East Asia and Pacific Economic Update, which covers China, Indonesia and Southeast Asia, says the region's economic recovery is robust, but risks are rising.

It says output has recovered to a level higher than before the financial crisis. Real GDP growth in the region is expected to rise to 8.9 percent this year. And private sector investment is driving growth once again.

The region's robustness has caused capital inflows to surge in recent months. But the World Bank stresses that renewed inflows of capital into the region now presents an increasing risk to the economic stability.

The sheer volume of these inflows has driven up the value of several Asian nations' currencies in recent weeks. That caused local policy makers and businesses to worry about waning competitiveness.

Vikram Nehru, World Bank's Chief economist for the East Asia and Pacific region says, the biggest rising risk now is that inflation is beginning to re-emerge. This is being exacerbated by lots of dollars that are flowing into the region. That's complicating the lives of monetary authorities, who are trying to ensure that inflation is kept in check.

But he says the increased attention to environmental sustainability and green technologies could create new opportunities for the region. And new technologies could help to maintain East Asian growth in the long run.

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