VAT cut in Sri Lanka, Japan-Korea trade spat

The decision by Sri Lanka’s new president to cut the rate of VAT from 15% to 8% will provide a significant boost to the economy, but will put increased strain on the country’s fragile public finances and could cause bond yields to spike and the value of the currency to plummet. Meanwhile, there were signs this week that Japan and Korea's trade spat might come to an end soon. But given the limited economic impact of the dispute so far, a thawing of tensions wouldn’t provide much of a boost to Korea’s economy.