Company: HBCYF
Filing Date: 2025-07-30
Form Type: 6-K
Source: 0001089113-25-000052
Chunk: 57

Company: HSBC HOLDINGS PLC
Filing Date: 2025-07-30
Form: 6-K
Chunk 57
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 to fall sharply and commodity prices to decline. Inflation is lower relative to the Central scenario in most markets, although that narrative is disrupted in the US and Mexico by the assumption of higher tariff rates and a broad increase in import prices. Mexico is affected in a similar way to the US on the supply side, given the significance of its trade with the US and the assumption that countries react to US tariffs with countermeasures. In the upside scenario, robust economic growth drives investment and consumption higher, causing a temporary acceleration of inflation. Scenarios produced to calculate ECL are aligned with HSBC’s top and emerging risks. Description of economic scenarios The economic assumptions presented in this section are formed by HSBC with reference to external forecasts and estimates for the purpose of calculating ECL. Forecasts may change and remain subject to uncertainty. Outer scenarios are designed to capture potential crystallisation of key economic and financial risks and alternative paths for economic variables. The scenarios used to calculate ECL are described below. The consensus Central scenario HSBC’s Central scenario incorporates an expectation of slower global growth across many of our key markets in 2025-2026, relative to the fourth quarter of 2024. The deterioration reflects the anticipated effect of greater policy uncertainty and higher US tariff rates on trade, investment and employment. The scenario is consistent with the tariff rate, measured as an effective trade-weighted average, of 13.7% in 2025 and 8.6% in 2026. The notable exceptions are mainland China and Hong Kong, where forecasts have improved. Recent data in these markets has suggested that while tariffs and subdued consumer confidence will continue to be headwinds in the months ahead, official support for the respective economies is expected to ensure that the downturn is less pronounced than previously expected, amid strong fiscal support and increasingly supportive monetary conditions. In the US and UK, household and business confidence has weakened amid high policy uncertainty and restrictive interest rates. In Europe, manufacturing remains in a protracted downturn, and trade policy uncertainty is also weighing on sentiment. Planned increases in fiscal spending to support tax cuts, welfare spending and defence are expected to deliver only incremental additional growth, spread out over several years. Global GDP is expected to grow by 2.3% in 2025 in the Central scenario and the average rate of global GDP growth is forecast to be 2.5% over the entire forecast period. The key features of our Central scenario are: – GDP growth rates in most of our main markets are expected to slow in 2025 compared