Inflation, labor shortages weigh on Japan's growth: economic white paper

Japan's Cabinet Office on Friday released its annual report on the Japanese economy and public finance, or the economic white paper, for fiscal 2026, noting that Japan's economic recovery continues to face multiple challenges, including imported inflation driven by the Middle East conflict and persistent structural problems such as labor shortages.

According to the white paper, heightened tensions in the Middle East have pushed up international crude oil prices, with the increase filtering through supply chains to raise costs for petroleum and coal products, chemicals and other goods.

Although the Japanese government has sought to cushion the impact by providing fuel subsidies, releasing oil reserves, and promoting alternative sourcing of raw materials, higher import costs could still squeeze corporate profits and add to the financial burden on households.

The white paper also identifies labor shortages as one of the most significant structural challenges facing Japan's economy.

In recent years, higher labor force participation among women and the elderly has helped ease pressure caused by the shrinking workforce. Nevertheless, labor shortages continue to worsen, particularly at small and medium-sized enterprises and in the non-manufacturing sector.

At the same time, structural mismatches in the labor market persist, with skilled positions in fields such as construction and nursing care remaining chronically difficult to fill.

The report further notes that Japan's potential economic growth rate remains low. Insufficient capital accumulation continues to curb growth momentum, while investment in areas such as digitalization and automation is not enough to fully offset the impact of the country's declining working population.

The Japanese government publishes the white paper on the economy and public finance every year to analyze the country's economic conditions, fiscal performance, and employment situation, while also providing recommendations for future economic and fiscal policies.

Inflation, labor shortages weigh on Japan's growth: economic white paper

Chinese meteorologists have deployed a swarm of drones for the first time to conduct three-dimensional observations throughout the entire passage of Typhoon Noul, providing new data to improve forecasting and disaster response.

The experiment began on Friday at the China Meteorological Administration's field research base for low-altitude weather observation in Shenzhen, south China's Guangdong Province, as meteorological researchers tracked Noul, the year's 12th typhoon.

Unlike a single drone, the drone swarm consists of multiple unmanned aircraft operating in coordination to simultaneously collect meteorological data at different locations and altitudes.

The drones continuously measured key low-altitude atmospheric conditions before, during and after the typhoon, including temperature, humidity, wind fields and turbulence. Researchers also monitored flight performance data to assess the operational limits of drones under extreme weather conditions.

The administration said the technology enables high-density, three-dimensional sampling of the lower atmosphere, helping fill gaps in offshore low-altitude observations. The data are expected to improve typhoon monitoring and forecasting while supporting the safe operation of drones in severe weather.

Noul landed near the coastal town of Pinghai in Huidong County, Huizhou City, at around 03:50 on Sunday, packing maximum sustained winds of 162 kilometers per hour.

It waned to a severe tropical storm and is tracking northward toward neighboring Hunan Province in central China.

Drone swarm deployed for full typhoon observation