The South Asia Economic Report, a biannual report by ADB on economic and development issues in South Asia, said that the "region remains on a solid track of high economic expansion led by India".
At the same time, South Asia is undergoing momentous changes driven by global and regional trends, which are having dramatic impacts on educational and health needs, the bank said in a statement.
"The region's education systems must be transformed for the countries to be able to adapt to the new realities," said Kunio Senga, director general of ADB's South Asia department.
"Quality education is needed at all levels, and technical, vocational, and higher education should be aligned with global market demands."
Spelling out some details, the bank explained that India, for example, has only 12,000 training and vocational institutes, while China has 500,000 vocational schools.
"Identifying the education and training strategies that will allow youth to take advantage of growing domestic and international economic opportunities is critical," it added.
The bank further said that the region's competitiveness could also be undermined by new health challenges as increasing numbers of people suffer from non-communicable illnesses due to changing lifestyles.
"While the challenge of communicable diseases continues, the burden of non-communicable diseases is also increasing. India has more people with diabetes than any other country in the world," the bank remarked.
Without effective health promotion and preventive activities, these diseases would adversely affecting labour productivity, as many of them occur during middle age.
"Despite the rapid economic growth of recent years, the quality of education and health care in South Asia remains worse than all other parts of the world except Sub-Saharan Africa," the report said.
"Clearly, rapid economic growth alone will not take care of human development in the region," said Juan Miranda, director general of ADB's Central and West Asia department.