Business Finance
ACFI 720W UNH Week 9 The Economic Influence of Covid 19 in China Reflection Paper

ACFI 720W

University of New Hempshire

ACFI

Question Description

I’m studying for my Business class and don’t understand how to answer this. Can you help me study?

The paper must mention the economic influence of COVID(virus) in China and the opinion of yourself. APA, 2 pages and double space.

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[ Society of Actuaries Research Brief Impact of COVID-19 March 10, 2020 March 2020 2 Society of Actuaries Research Brief Impact of COVID-19 March 10, 2020 AUTHOR R. Dale Hall, FSA, MAAA, CERA, CFA REVIEWERS Mervyn Kopinsky, FSA, EA, MAAA Cynthia S. MacDonald, FSA, MAAA Max J. Rudolph, FSA, MAAA, CERA Steven C. Siegel, ASA, MAAA Ronora E. Stryker, ASA, MAAA Caveat and Disclaimer This study is published by the Society of Actuaries (SOA) and contains information from a variety of sources. The study is for informational purposes only and should not be construed as professional or financial advice. The SOA does not recommend or endorse any particular use of the information provided in this study. The SOA makes no warranty, express or implied, or representation whatsoever and assumes no liability in connection with the use or misuse of this study. Copyright © 2020 by the Society of Actuaries. All rights reserved. Copyright © 2020 Society of Actuaries 3 TABLE OF CONTENTS Section 1: Introduction ............................................................................................................................................. 4 Section 2: Key Statistics ............................................................................................................................................ 5 Reported Cases ..........................................................................................................................................................5 Mortality Rates ...........................................................................................................................................................5 Comparison to Past Pandemics and Influenza ...........................................................................................................5 Health Care Cost and Utilization ................................................................................................................................6 Infection Spread Rate .................................................................................................................................................6 Section 3: Economic and Asset Impact ...................................................................................................................... 7 Macroeconomic Variables..........................................................................................................................................7 Asset Values and Volatility .........................................................................................................................................8 Low Interest Rate Environment .................................................................................................................................8 Reinvestment Risk ......................................................................................................................................................8 Section 4: Operational Risks...................................................................................................................................... 9 Remote Work .............................................................................................................................................................9 Internet Service Provider Capacity.............................................................................................................................9 Cyber Risk ...................................................................................................................................................................9 International Trade Dependency .............................................................................................................................10 Section 5: Previous SOA Research Highlights ........................................................................................................... 11 References .............................................................................................................................................................. 13 About the Society of Actuaries ................................................................................................................................ 16 Copyright © 2020 Society of Actuaries 4 Section 1: Introduction In late December 2019, doctors in the Wuhan province of China began to piece together information from several medical cases showing similar symptoms. As 2019 ended, Chinese officials announced a pneumonia-like outbreak and began to identify a “novel coronavirus” linked to the cases. As the Lunar New Year banquet tradition occurred in Wuhan in mid-January 2020, infections began to rapidly increase. By January 23, over 600 cases had been confirmed and Wuhan and other areas in China instituted quarantines. Through the month of February to today, the epidemic has spread. The number of confirmed cases involving the novel coronavirus named “SARS-CoV2”, and causes the respiratory disease now named “coronavirus disease 2019” (COVID-19), has reached over 110,000 world-wide. Over 60 countries have reported cases, and over 4,000 deaths world-wide have now occurred. The health, mortality and economic focus has become one of international concern beyond China, as countries like Italy, South Korea, Iran, France, Germany and Spain have also reported well over 1,000 confirmed cases. Increases in cases in other locations may occur depending on the pace of implementing testing protocols. The impact of travel and shipping restrictions in a modern, interconnected international economy has had an exacerbating effect of the outbreak into logistics and the financial markets. When the severe acute respiratory syndrome (SARS) outbreak occurred in 2003, annual airline passenger traffic between the U.S. and China was well under 2 million travelers per year. In more recent years, the number annually exceeds 8 million people. Supply chains of international operations are greatly impacted as well, as many major worldwide manufacturers are evermore connected across continents. The result in February and March 2020 has been one where a confluence of risks has come together. Morbidity, mortality, asset/liability management and operational risks are all a part of the initial and evolving story. This Society of Actuaries Research Brief has been constructed to highlight some of the key features of the epidemic and contemplate the risks for the actuarial profession to consider in their work. Copyright © 2020 Society of Actuaries 5 Section 2: Key Statistics Reported Cases National health organizations around the world have been fast at work in connecting with health care providers in order to collect current case information. As of March 10, 2020, over 118,000 cases have been reported worldwide, and these countries have all reported over 300 cases of COVID-19: Country China Italy Iran South Korea France Spain Germany United States of America Japan The Netherlands Switzerland United Kingdom Confirmed Cases 80,757 10,149 8,042 7,513 1,784 1,646 1,457 808 581 382 374 325 Percentage of World-Wide Cases 68.4% 8.6% 6.8% 6.4% 1.5% 1.4% 1.2% 0.7% 0.5% 0.3% 0.3% 0.3% Mortality Rates World-wide mortality is currently crudely estimated at approximately 3.6% and are generally reported by health and media publications in the 3.0% – 4.0% range. These crude estimates, however, often are adjusted due to likely under-reporting of actual cases. Many potential cases may be asymptomatic, and mild cases may not seek treatment in the local health care systems. Initial crude mortality rates in the U.S. are currently estimated at 3.5% - 4.5%, slightly higher than the world-wide rate, primarily due to the disease initially being seen in higher age groups. Mortality rates appear to be emerging as very dependent on age, with much higher mortality rates being seen for patients over ages 70, especially for those with health conditions that weaken the lungs and immune system. Estimates for older age groups have been estimated in the 8.0% - 10.0% range from various health officials and media sources. The ultimate rate of mortality from COVID-19 will evolve over time. Some key health officials in the U.S. expect an ultimate population mortality rate from the disease to settle in the 0.5% - 1.0% range. Life insurance companies will focus on how the population mortality rate translates into the ultimate mortality of their own insured populations. Socioeconomic factors may be a key driver of how mortality plays out, as an individual’s access to healthcare services and current health condition are often factors that drive survival rates in a confirmed case. Comparison to Past Pandemics and Influenza By comparison, the spread of COVID-19 has been much greater than similar epidemics witnessed in the 21st century, but also with much lower mortality rates. The following table shows comparative statistics of COVID-19 Copyright © 2020 Society of Actuaries 6 compared to the severe acute respiratory syndrome (SARS) outbreak of 2003 and the Middle East Respiratory Syndrome (MERS) in 2012. Epidemic Number of Countries Reporting Cases Estimated Deaths Estimated Contracted Cases Estimated Mortality Rate SARS (2002 – 2003) 29 774 8,098 9.6% MERS (2012 – 2014) 27 858 2,494 34.4% COVID-19 (2019 – 2020) 60+ 4,262 118,101 3.6% The U.S. was a very small part of these previous outbreaks in comparison to the level of activity seen with COVID19. Eight U.S. patients had evidence of the SARS infection, and no deaths occurred in the U.S. due to SARS. The U.S. saw only two cases and no deaths due to MERS in 2014, both associated with individuals who had lived or worked on the Arabian Peninsula. In addition, in can be beneficial to compare the extent of the impact of a sample influenza year to understand the magnitude and strain on health care systems and population mortality. The most recent full year of mortality in the U.S. is from 2018, which was also a fairly harsh year for the age-adjusted influenza mortality rate. The overall U.S. population age-adjusted rate for influenza grew by 4.2% in 2018. The U.S. influenza season across 2017-2018 saw over 48 million people become ill, with over 950,000 people hospitalized and over 79,000 deaths. The annual mortality rate for influenza in the U.S. typically is observed between 0.1% and 0.3%. Additionally, in 1918 the world faced an influenza H1N1 pandemic as World War I was ending. Mortality was high in people younger than 5 years old, 20-40 years old, and 65 years and older. The high mortality in healthy people, including those in the 20-40-year age group, was a unique feature of this pandemic. Health officials estimate that about 500 million people became infected with this virus, and mortality was estimated to be approximately 50 million worldwide. Since 1918, the world has experienced three additional pandemics, in 1957, 1968, and most recently in 2009. These subsequent pandemics were less severe and caused considerably lower mortality rates than the 1918 pandemic. The 1957 H2N2 pandemic and the 1968 H3N2 pandemic each resulted in an estimated 1 million global deaths, while the 2009 H1N1 pandemic resulted in fewer than 300,000 deaths in its first year. Health Care Cost and Utilization Data on the cost and utilization of treatment for individuals who are diagnosed with COVID-19 still appears to be emerging. Future research briefs will focus on emerging data for the cost of detection and treatment. In an effort to encourage early detection and treatment, some U.S. health insurers announced that they would waive copays and cost sharing for COVID-19 detection tests. Several pharmaceutical companies have been developing and testing treatments for COVID-19, though results are still preliminary. In addition to these antiviral and antiinfective treatments, preventive medicines and therapeutic antibodies are being reviewed. Infection Spread Rate Transmission rates for diseases, and the intensity of an outbreak, are highly dependent on how the pathogen travels between people. Coronaviruses generally can travel up to six feet from an infected person, as they move through respiratory droplets produced through sneezes, coughs or conversations. Some estimates suggest that Copyright © 2020 Society of Actuaries 7 each person with the new coronavirus could infect between two and four people without effective containment measures. The incubation period for COVID-19 is also relatively long compared to other diseases, with estimates running from 2- 14 days from the time of exposure to when the individual shows symptoms. With concerns about the spread of the disease and the length of the incubation period, many countries have implemented quarantines. The quarantines vary broadly, including limitations on entering the country to full regional or national quarantines of the population. Recently, the Italian government declared the entire country a "red zone," meaning people should stay home except for work and emergencies. By comparison, other pathogens more easily travel through the air for longer distances, such as up to 30 meters for tuberculosis, chickenpox and measles. With the SARS coronavirus in 2003, world health authorities were able to eventually track and isolate cases. The result was to bring the average number each sick person infected down to 0.4, suppressing the outbreak. Health and public officials have responded in several cases by canceling spectator events that would bring large groups of individuals into close proximity to each other. As examples: • The BNP Paribas Open, a main tennis tournament held in Indian Wells, CA for the Association of Tennis Professionals and Women’s Tennis Association, was canceled due to due to concerns surrounding the coronavirus and the safety of the participants and attendees at the event. • Several Union of European Football Associations (UEFA) Champions League matches, which often feature large fanbases travelling across Europe to support their teams, will be played behind closed doors without spectators in attendance. • The South by Southwest music, film and technology festival, held annually in Austin, TX has been canceled due to concerns about the coronavirus. Section 3: Economic and Asset Impact Macroeconomic Variables With COVID- 19 impacting business around the world, domestic and international financial markets have reacted to reflect potential lower levels of economic activity. The U.S. Bureau of Labor Statistics released its initial report for February 2020 on March 6 and noted that the U.S. labor markets were little changed from previous months. Nonfarm payroll employment rose by 273,000 in February, the unemployment rate was relatively unchanged at 3.5%, and the number of unemployed persons in the U.S. remained at 5.8 million. This reflected the continuing general steadiness within the U.S. labor market prior to trade and commerce disruptions that resulted as impacts of COVID-19 emerged in international trade. On Tuesday March 3, in an attempt to limit the economic and financial fallout from COVID-19, the Federal Reserve reduced the benchmark U.S. interest rate by half a percentage point to just below 1.25%, down from about 1.75%. As the impact of the epidemic was seen to impact global economic activity, the Organization for Economic Cooperation and Development estimated that global growth could slow to 1.5% in 2020. This was approximately half the rate it projected in November 2019. Similarly, the International Monetary Fund indicated it expected global growth could slow to 2.9%, following an estimation of 3.3% in January 2020. Copyright © 2020 Society of Actuaries 8 Asset Values and Volatility International financial markets have reacted to COVID-19 as some investors sought increasing shelter in government bonds amid uncertain future economic activity arising from the impact of COVID-19. Equity trading at the New York Stock Exchange was halted for 15 minutes early in the session on Monday March 9 as the Standard & Poor’s 500 Index fell 7% from its previous close. Major U.S. indexes are approximately 15 – 20% lower than recent highs from mid-February 2020, with current values similar to levels seen in August and October 2019 prior to general run-ups in equity values between October 2019 through mid-February 2020. Low Interest Rate Environment Low Interest rates in major international financial markets have been more the norm over recent years, and the current impact of COVID-19 has further driven down interest rate levels. Benchmark Treasury yields in the U.S. have fallen nearly 100 basis points since mid-February, with the benchmark 10-year Treasury yield temporarily reaching a record low of under 0.40% and the 30-year Treasury moving below 1.00% for the first time ever. While some widening of corporate spreads was initially seen as interest rates fell in late February 2020 to maintain reinvestment yields, spread widening has not kept up with the decline in Treasury yields in more recent observations. Reinvestment Risk With the material drop in interest rates to even lower levels, the opportunity to reinvest maturing assets becomes even more difficult for financial institutions. Maintenance of fixed income portfolio yields that support fixed interest crediting rates will pose a continuing challenge as the prolonged low interest rate environment continues. Copyright © 2020 Society of Actuaries 9 Section 4: Operational Risks As businesses around the world work with their employees to minimize the impact of COVID-19, new operational risks and concerns begin to emerge. The following risks have been identified as key ones to watch through discussions with actuarial profession thought leaders. Remote Work A common step implemented by many organizations around the world has been to encourage remote work environments. In this setup, employees work from a remote location outside the normal office setting, often from their own personal residence. Often, the organization will provide key technology items, such as a laptop computer or access to systems through internet connections, in order to facilitate a productive work environment. This helps maintain physical distance and reduce the chance of spreading disease among an employee population. While remote work is not a new concept, the volume of remote work that is expected to be implemented due to COVID-19 may greatly exceed previous expectations. Employers will be looking to maintain productivity and keep processes moving. Many organizations may need to quickly convert paper-based processes and educate employees on effective communication through technology solutions. A mitigation to this risk is that many employers have already implemented some form of remote work, ranging from arrangements that allow employees to periodically work remotely up to full time remote work. The previous investment of these work arrangements may be beneficial to companies in any prolonged transition for their employees. Physical asset and information security risk also increases as remote work becomes more the norm. Organizations are often encouraged to remind staff of basic security practices, like ensuring that they don’t leave company assets, documentation, confidential information or property unattended in public places, and to be aware of others who may be working around them. Internet Service Provider Capacity With the growth of remote work, many employers are looking to determine if there will be any new or different strains on internet service provider (ISP) capacity. Remote work in large volumes across many organizations may put different pressure loads on internet service providers. Organizations and their employees will be monitoring connection speeds needed for a range of work, especially if work is done u ...
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Final Answer

Attached.

The Economic Influence of COVID-19 in China – Outline
I. Introduction
II. Effects on retail sales
III. Effects on manufacturing
IV. My view on the coronavirus issue and the Chinese economy
V. Conclusion


Running head: THE ECONOMIC INFLUENCE OF COVID-19 IN CHINA

The Economic Influence of COVID-19 in China
Name
Institution

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THE ECONOMIC INFLUENCE OF COVID-19 IN CHINA

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The Economic Influence of COVID-19 in China
Coronavirus disease (COVID-19) is a new viral infection causing contagious illness. The
illness triggers respiratory infection (like those of flu) with symptoms including coughing,
nausea, and trouble breathing in more extreme instances. Coronavirus spreads mainly when
people cough or sneeze, by interaction with an infected individual. It often spreads when an
individual, contacts a substrate or item that has the viruses on it and then touches his or her face.
Currently, the spread of the novel coronavirus (COVID-19) is the most noticeable global
catastrophe of 2020, aside from the growing conflicts between the United States and Iran that
could negatively impact not only th...

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