Company: HBCYF
Filing Date: 2025-04-29
Form Type: 6-K
Source: 0001654954-25-004763
Chunk: 48

Company: HSBC HOLDINGS PLC
Filing Date: 2025-04-29
Form: 6-K
Chunk 48
---
 implementation of higher tariffs as well as underlying structural weakness in some economies, before a gradual pick-up over the remainder of the forecast horizon. Growth rates are projected to remain below the average growth rate over the five-year period prior to the onset of the pandemic. Unemployment is forecast to rise gradually amid weaker economic activity, but is set to remain low by historic standards. Inflation is expected to increase temporarily in several of our main markets as a result of tariffs. The main exceptions are Hong Kong and mainland China, where inflation is expected to remain subdued, despite higher tariffs, due to weak domestic demand. Interest rates are forecast to remain at a higher level than in recent years.

- The consensus Upside scenario: This scenario incorporates a de-escalation in tariff actions, deregulation, and a reduction of supply constraints. It is also consistent with the reduction in geopolitical tensions, such as the achievement of durable settlements of regional conflicts. In this scenario growth accelerates, inflation falls at a faster rate than in the Central scenario and unemployment declines. This would enable central banks to lower interest rates more quickly than in the Central scenario. Asset prices, including housing, would rise more quickly than in the Central scenario.

- The consensus Downside scenario: This scenario features weaker economic activity compared with the Central scenario, driven by higher tariffs than assumed under the Central scenario. It causes a supply shock that drives inflation and interest rates above the Central scenario forecast. In this scenario, GDP growth slows, unemployment rises, financial conditions tighten and equity markets and house prices fall.

- The Downside 2 scenario: This scenario reflects management's view of the tail end of the economic distribution. It incorporates the simultaneous crystallisation of a number of risks that leads to a deep global recession. The narrative features an escalation in tariff actions globally and further deterioration of geopolitical relations that lead to significant supply chain degradation. Inflation and interest rates are assumed to rise initially. Unemployment also increases rapidly, asset prices fall and defaults rise significantly. As recession takes hold, commodity prices fall back and inflation falls.

Both the consensus Downside and the Downside 2 scenarios are global in scope, and while they differ in severity, they assume that the key risks to HSBC, listed above, crystallise simultaneously.

The following tables describe key macroeconomic variables in the consensus Central scenario, consensus Upside scenario, consensus Downside scenario and Downside 2 scenario.

| Consensus Central scenario 2Q25-1Q30 (as at 1Q25) |     |     |           |