Company: HBCYF
Filing Date: 2025-07-30
Form Type: 6-K
Source: 0001089113-25-000052
Chunk: 62

Company: HSBC HOLDINGS PLC
Filing Date: 2025-07-30
Form: 6-K
Chunk 62
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 the US and Mexico, where tariffs and

countermeasures are assumed to cause a temporary increase in

inflation above the Central scenario. Interest rates are also assumed

to rise to a higher level, before the effects of weaker consumption

demand begin to dominate.

Key downside risks include:

– an increase in protectionist policies, as countries that impose

tariffs are met with countermeasures. This lowers investment,

complicates international supply chains and reduces trade flows;

– broader and more prolonged conflict in the Middle East and the

Russia-Ukraine war, which undermine confidence and investment;

and

– continued differences between the US and China, which affects

economic confidence, and the global goods trade and supply

chains for critical technologies.

The consensus Downside scenario

In the consensus Downside scenario, economic activity is weaker

compared with the Central scenario and the impact of tariffs on the

global economy is worse than expected. The scenario is consistent

with the tariff rate, measured as an effective trade-weighted average,

rising to 27.6% in 2025, and remaining at that level in 2026.

In the scenario, GDP declines, rates of unemployment rise and asset

prices fall. The scenario features an increase in tariffs over and above

those assumed in the Central scenario and an escalation of

geopolitical tensions. In most markets, inflation declines relative to

the Central scenario, as tariffs are assumed to drive a drop in US

import demand. In the US and Mexico inflation is assumed to

increase as higher tariffs across a broad range of imported goods pass

through to prices. Rising unemployment and falling commodity prices

are also calibrated so that they weigh on activity.

The following table describes key macroeconomic variables in the consensus Downside scenario.

| Consensus Downside scenario (3Q25–2Q30) |      |       |      |       |           |       |                |       |        |       |      |       |        |       |
|                                         |   UK |       |   US |       | Hong Kong |       | Mainland China |       | France |       |  UAE |       | Mexico |       |
| GDP level (%, start-to-trough)1         | -0.9 | -3Q27 | -1.5 | -2Q26 |      -4.2 | -1Q26 |           -2.9 | -4Q25 |   -0.6 | -1Q26 | -0.2 | -