By Doris C. Dumlao

PHILIPPINES - Emerging Asia is facing downside risks this year from the softening in some of its largest economies, but the Philippines appears to be in a good position and may stay buoyant, said a visiting economist from American banking giant Citibank.

In an interview with Inquirer last week, London-based Citibank managing director for emerging market economics David Lubin said that while the growth story was still in emerging markets, there were risks of softening in large Asian markets like China, India and Indonesia.

The economist said China, which has been trying to put on the brakes on economic growth since 2010, still had ample monetary and fiscal stability to grow its economy by 8.4 per cent this year.

But over the medium term, he said China's increased dependence on credit since the Lehman Brothers collapse three years ago could still lead to some vulnerabilities.

Aside from risks in China, Lubin said some countries like India and Indonesia are not fulfilling their potential.

"Both have weak commitment to structural reform. Both have deteriorating external balances, both at danger of losing control of inflation expectations and both have elections in 2014, which could postpone commitment to structural reform," he said.

"I would say that, the Philippines still looks like an island of stability in a way," Lubin added, noting that inflation expectations were well-anchored.

"There's no asset or price bubble. Although the peso has appreciated in real terms certainly compared to other currencies in emerging economies, the exchange rate has no obvious sense of overvaluation," Lubin said.

On the real economy, Lubin noted that the engines of growth in the Philippines from outsourcing, technology sector and food processing "seem reasonably strong."

Lubin also said that China would likely generate about a third of global growth this year and, combined with the output of other emerging markets, could account for about half.