The March 11, 2011, earthquake and tsunami that occurred in Japan followed by the nuclear crisis at the Fukushima Nuclear Complex, evacuations, and shortage of electricity are having a large negative economic impact on the country but a lesser effect on world markets. Japan has lost considerable physical and human capital. Physical damage has been estimated from $195 billion to as much as $305 billion, the latter figure being nearly four times as much as Hurricane Katrina ($81 billion) and roughly equivalent to the GDP of Greece and twice that of New Zealand. In excess of 23,000 persons in Japan are killed or missing, and more than 400,000 homes and other buildings have been totally or partially damaged. The earthquake-related events in Japan are still unfolding, but each round of economic assessments seems more and more pessimistic. Early data indicate that the economic damage is quite severe. Japan's economy has contracted for two quarters and essentially is in recession, but it may begin to expand later in the year because of rebuilding activity. Much depends on whether the damage from the nuclear plant can be contained, the speed at which electrical capacity can be restored, and how quickly Japan's industrial base can recover. Economic growth in 2011 is expected to be around zero with the current range of estimates between minus 1% to plus 1%. As the third-largest economy in the world, Japan's GDP at $5.5 trillion accounts for 8.7% of global GDP. Congressional interest on the economic side centers on humanitarian concerns, radioactive fallout reaching the United States, the impact on U.S. citizens and American companies in Japan, the effects on trade and disruptions to supply chains, and increased volatility in Japanese and U.S. financial markets, interest rates, and the yen-dollar exchange rate. The damage from the earthquake and tsunami is being compounded by the evacuations and uncertainty from the problems at the Fukushima nuclear reactors. Tokyo and northern Japan's power supply is experiencing a shortfall of as much as a third of peak capacity, and the electrical grid is experiencing a current shortage of as much as a quarter of capacity. The earthquake also damaged plants and equipment far from its epicenter. Port facilities, sensitive electronic equipment, 3,970 roads, and 71 bridges also were harmed. These were located in a wide area of the country that even reached Tokyo's northern suburbs. The human toll also has been great with 15,093 persons killed, 9,093 missing, and another 5,301 injured (as of May 17, 2011). In Miyagi and Fukushima prefectures, 1,669 public schools—69% of the total—were damaged or have collapsed. Higher radiation levels have been detected in Tokyo's water supply and a ban has been placed on shipping leafy vegetables and milk from the region of the Fukushima Nuclear Complex. On April 17, 2011, The Tokyo Electric Power Company (Tepco), the owner of the nuclear plants, announced a roadmap for ending the crisis at the nuclear plants that included from three to six months just to cool the reactors and stop the radiation leakage. Depending on how long the nation's electrical generating capacity is impaired, how long and how wide an area of evacuation because of radiation danger is continued, whether the nuclear reactors are brought under control, and how quickly alternative sources can be found for critical electronic and automotive parts whose production has been curtailed, the negative economic effects could grow. Larger companies in the affected area are being asked to reduce electricity usage by a quarter. In the cities, many street lights, neon signs, and hallway lights have been switched off. This contributes to the somber pall that has been cast over urban life. In recent decades, Japan's growth rate has lagged behind that of the world, so it has not been a major contributor to global economic growth. The net impact of the disaster on global GDP, therefore, is expected to be relatively small (minus about one-half a percentage point) with about half of that effect confined to Japan, itself. As for U.S.-Japan economic relations, it is likely that the impact of the earthquake and ensuing events on the bilateral economic relationship will be modest overall; however, the effects could be more profound in the near term and on specific sectors and firms for which trade and investment with Japan is particularly important. Japan plays a major role in global supply chains both as a supplier of parts and as a producer of final products. In this age of just-in-time production processes, even a small disruption in the provision of a single component can wreak havoc on an entire product line. Japan's production of automobiles, semiconductors, and electronics is likely to be affected the most, but companies in the United States that rely on Japan for critical components such as electronic parts and batteries or transmissions for electrical vehicles also will be affected. Tourist arrivals from Japan also are expected to fall as will the number of Americans visiting Japan. U.S. imports from and exports to Japan had been temporarily slowed because of shipping bottlenecks and the nature of the disaster. In the medium term, a slowdown in growth in Japan is likely to reduce U.S. exports there, but eventually rebuilding will require large amounts of construction supplies. If imports of certain products from Japan become scarce, China, South Korea, or other nations may gain at Japan's expense. Trade data for Japan are presented in the Appendix to this report. Currently, it appears that radioactive contamination of seafood from the recent nuclear disaster in Japan is not a food safety problem for consumers in the United States. The U.S. Food and Drug Administration has banned imports of spinach and kakina from the four Japanese prefectures of Fukushima, Ibaraki, Tochigi, and Gunma and milk from Fukushima prefecture only. All milk and milk products and vegetables and fruits produced or manufactured from the four Japanese prefectures affected are to be detained upon entry into the United States and not allowed to enter the U.S. food supply unless shown to be free from radionuclide contamination. The European Union, Australia, China, Hong Kong, Taiwan, South Korea, Philippines, Singapore, India, Brazil, and Canada have required increased surveillance of food products from Japan. Some have banned food from the prefectures most affected. At many Chinese ports, Japanese ships with food cargo are being denied customs inspections. International shipping companies reportedly are charging higher rates for calling at Japanese ports. Premiums being required by ship owners to enter Japanese ports can be from $147,000 to $588,000. The debris washed out to sea from the tsunami is being picked up by Pacific Ocean currents and is projected to spread eastward from Japan and in about three years likely will reach the U.S. West Coast. If so, this would wash debris onto California beaches and the beaches of British Columbia, Alaska, and Baja California. The value of the yen has been increasing, prompting coordinated intervention by the G-7 countries (Group of Seven Industrial nations) to halt excessive yen appreciation. A repatriation of assets back to Japan may put upward pressure both on the yen and on U.S. interest rates if Japanese investors sell U.S. Treasury and other securities, but analysts expect that over time eventually the damage from the disaster will weaken the yen. The questions going forward include whether Japan's debt burden will leave it unable to secure the funds needed for rebuilding; whether the disaster has fundamentally altered the Japanese economy and the competitive position of its industries relative to those in China, South Korea, and other nations; what the impact will be on energy markets and the nuclear industry in Japan and the world; how Japan and other countries should cope with large inflows of "hot money" that can distort exchange rates; whether global supply chains can adjust to the loss of supply from Japan; and how quickly Japan can regain its economic activity and rebuild its capital stock. Since Japan has a history of severe earthquakes, its citizens and companies have made considerable preparations and have recovered from previous disasters. The January 1995 Kobe earthquake (6.8 magnitude) hit a region that was heavily industrialized and densely populated and caused about $100 billion in damage. The immediate effect was a contraction in Japan's economy of 2.6% but a recovery that began the following month. The Kobe quake, however, did not trigger a tsunami, a nuclear crisis, or severe shortages of electricity. The direct damage from Japan's earthquake and tsunami has been concentrated in the northern region of the country, some distance from Japan's industrial heartland. The financial and economic effects, however, are spreading through the Japanese economy, the East Asian region, and also may affect businesses and consumers in the United States. The effect of the record 9.0 earthquake was compounded by the ensuing tsunami that swept as far as 6 miles inland in Japan, causing widespread destruction, and that spread out across the Pacific. It caused tens of millions of dollars of damage in Hawaii, as much as $40 million in damage in California, and millions of dollars of damage primarily to harbors and boats in Oregon. As shown in Figure 4 , the tsunami also destroyed or damaged aquaculture facilities in prefectures quite distant from the epicenter. The damage, furthermore, has been compounded by the nuclear contamination from the Fukushima Daiichi Nuclear Plant plus a shortage of gasoline and of electricity that has caused rolling blackouts in Japan's industrial centers. In mid-April, Japan's oil refining capacity was basically restored. Japan's economic growth, already anemic because of the global recession in 2008-2009, is expected to drop into negative territory for a quarter or two but turn positive again as the crisis passes and rebuilding commences. As the extent of the damage becomes more apparent, forecasts for Japan's economic growth are becoming more and more pessimistic.