In the Japanese economy, major distortions are progressing.
Literal
Japanese economy [at-では], large distortion [subject-が] progressing.
ひずみ ('distortion, strain') is written in hiragana here but can be 歪み. 進行しつつある uses ~つつある, the formal progressive pattern meaning 'is in the process of, is gradually doing.' More literary than ~ている — it emphasizes the ongoing, incremental nature of the change. An economics commentary sentence.