Company: HBCYF
Filing Date: 2025-04-29
Form Type: 6-K
Source: 0001654954-25-004763
Chunk: 47

Company: HSBC HOLDINGS PLC
Filing Date: 2025-04-29
Form: 6-K
Chunk 47
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 key markets, particularly for 2025, with higher tariffs expected to exert renewed upward pressure on inflation, such that it is now forecast to remain above central bank targets in 2025-26 in both the UK and US. Interest rate forecasts for both markets imply that central banks will look through temporary price effects and engage in a moderate reduction in interest rates over the remainder of 2025. In Hong Kong, inflation is forecast to remain anchored to its long-term average throughout the forecast horizon. Lower inflation in mainland China has been driven by weak domestic demand, particularly consumption, and is forecast to remain low as domestic supply increases due to tariff constraints on trade. Consequently, in the Central scenario forecast, it is expected that there is greater scope for policymakers in mainland China to lower policy rates, given the subdued demand backdrop and low inflation environment.

In mainland China and Hong Kong, real estate prices have continued to fall, reflecting high levels of inventory and weak buyer confidence, despite the delivery of supportive policy measures. Forecasts for both Hong Kong and mainland China anticipate that prices will decline throughout 2025 before recovering only gradually from 2026 onwards. House price growth forecasts in the UK and US envisage continued steady growth. In the UK, a moderate fall in rates is expected to improve affordability, while in the US, low housing supply and low unemployment have acted to support price growth.

Risks to the Central scenario outlook are captured in the outer scenarios. The Upside and Downside scenarios are constructed to reflect the economic consequences from the crystallisation of a number of key economic and financial risks. Sources of forecast uncertainty include tariff policy and the rates at which tariffs are levied, geopolitical tensions, inflation and the outlook for monetary policy.

The Downside scenarios explore the possibility that tariff actions escalate, leading to lower GDP growth but higher inflation and interest rates than is forecast in the Central scenario. As the trade policy environment remains volatile and complex, risks include broader and more severe global retaliatory actions, beyond tariffs. Escalation of geopolitical tensions remains a risk amid ongoing conflicts in the Middle East and between Russia and Ukraine, alongside heightened tensions between the US and China over a range of strategic issues. Further escalation of these tensions could lead to more adverse outcomes for global trade growth and supply chains, leading to greater trade frictions, higher costs and financial market instability.

The four global scenarios used for calculating ECL at 31 March 2025 were:

- The consensus Central scenario: This scenario features a slowdown in global growth in the near term, due to the