Company: HBCYF
Filing Date: 2025-10-28
Form Type: 6-K
Source: 0001654954-25-012267
Chunk: 58

Company: HSBC HOLDINGS PLC
Filing Date: 2025-10-28
Form: 6-K
Chunk 58
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 economic shocks drive consumption and investment lower and commodity prices fall. For most markets, inflation and interest rates are lower compared with the Central scenario. That narrative is disrupted in the US and Mexico as higher tariff rates and other countermeasures are assumed to drive a broad increase in import prices. In the Upside scenario, stronger economic growth and demand cause a temporary acceleration of inflation.

The four global scenarios used for calculating ECL at 30 September 2025 were:

- The consensus Central scenario: This scenario features slower global growth in the near term due to greater policy uncertainty, the implementation of higher tariffs as well as underlying structural weakness in some economies, before a gradual improvement over the remainder of the forecast horizon. Unemployment is forecast to rise gradually in many markets amid weaker economic activity and subdued business confidence, but is expected to remain relatively low by historic standards. The evolution of inflation is more mixed by market. In the US and UK, inflation is expected to stay above central bank target rates, reflecting higher tariffs in the US and the effects of services and food price inflation in the UK. In Hong Kong and mainland China, inflation is expected to remain subdued due to continued weakness in domestic demand and strong manufacturing growth in mainland China. Central banks are forecast to gradually cut policy interest rates, but they are expected to remain at a higher level than in recent years over the long term.

- The consensus Upside scenario: This scenario incorporates a partial rollback of tariff measures, deregulation and a de-escalation of geopolitical tensions as the Russia-Ukraine war moves towards a conclusion and conflict resolution in the Middle East is accelerated. An improvement in the US-China relationship is also assumed. In the scenario, growth accelerates, unemployment is lower and asset prices rise above the Central scenario. Inflation accelerates modestly, driven by increased investment and higher consumption spending.

- The consensus Downside scenario: This scenario assumes that the effects of tariffs on the global economy are worse than expected, leading to weaker economic activity compared with the Central scenario. In the scenario, GDP declines and unemployment rises, while asset prices and commodity prices fall. The scenario feature s an increase in tariffs over and above those assumed in the Central scenario, as the US administration raises tariffs on a number of key sectors. Geopolitical tensions are assumed to rise, as the Russia-Ukraine war intensifies and the conflict in the Middle East re-escalates. In most markets, inflation declines relative to the Central scenario, as tariffs are assumed to drive a drop in export demand from the US. In