Today it was the Philippines’ turn to announce a far stronger-than-expected Q2 GDP gain. As elsewhere in Asia, it is the resilience of domestic demand which is pulling the economy through, but the drag from the external side is becoming less severe too. A sustained and strong recovery is likely and the central bank will probably be one of Asia’s first to start hiking rates; we forecast from Q1 2010. In the near term, we expect the Philippine peso and Manila stocks to outperform the region.