(Yicai Global) March 2 -- Moody's Investors Service, one of the three largest credit rating agencies in the world, has lifted its previous estimate of China’s real gross domestic product growth to 5 percent for both this year and next year, up from 4 percent, now that the country has abandoned its zero-Covid policy.

Moody’s expects pent-up demand for services to support a consumption rebound starting this spring, the New York-based company said in its Global Macro Outlook 2023-24 report released yesterday.

The tourism and hospitality sectors are likely to benefit the most, although the length and strength of the rebound are uncertain in the absence of direct financial support to households, Moody's said.

Although China's risks to growth over the medium-to-long term are tilted to the downside, the uptick in the short term could turn out to be stronger than expected, Moody's added.

By contract, Moody's said that the US’ real GDP would likely edge up 0.9 percent in 2023, an improvement of 0.5 percentage point from its previous forecast last November, while that for 2024 would remain unchanged at 1.1 percent.

Key economic indicators point to a strong economic recovery in China. The purchasing managers’ index for manufacturing, a gauge of factory activity, surged to a 10-year high in February to 52.6, a jump of 2.5 points from the previous month, according to the latest figures released by the National Bureau of Statistics yesterday.

Editor: Kim Taylor