Venezuela growth could hit 20% this year, Credit Suisse says: 'Not typos!'

FILE PHOTO: An oilfield worker walks next to drilling rigs at an oil well operated by Venezuela's state oil company PDVSA

CARACAS (Reuters) - Venezuela's economy could surge 20% this year, investment bank Credit Suisse said in a report, sharply hiking its previous forecast of 4.5% due to growing demand for its crude since Russia was sanctioned for its invasion of Ukraine.

Credit Suisse also projected 2023 gross domestic product (GDP) growth of 8%, up from a prior estimate of 3%.

"These are not typos! If we are accurate, these might end up being among the strongest growth prints globally for these years," it said in the April 6 dated report.

Venezuela's economy hit "rock bottom" in 2020 and the new forecast is largely based on the expectation that oil GDP will rise more than 20%, it said.

A high-level meeting between U.S. and Venezuelan officials in Caracas in early March has opened the doors to talks about a possible easing of sanctions Washington imposed on the OPEC member's oil industry since 2019.

Credit Suisse said Venezuela could make up for the shortfall of Russian oil, pointing out that the United States imported roughly 700,000 barrels per day (bpd) of oil products from Russia in 2021, while Venezuela's oil export capacity last year was between 500,000 bpd and 700,000 bpd.

"It seems feasible that with a loosening of sanctions, Venezuelan authorities might pump that number up," it said.

"Suddenly, amid oil supply concerns, some have remembered that the alleged largest oil reserves in the world are in a country that is relatively not that far away from the U.S.."

The prospect of easing sanctions has state-run oil firm Petroleos de Venezuela (PDVSA) and some foreign companies taking steps in anticipation of higher oil exports. But export data shows PDVSA is still hobbled by years of mismanagement and lack of basic maintenance to key infrastructure for producing, upgrading, refining, storing and exporting oil.

(Reporting by Vivian Sequera in Caracas and Anthony Esposito in Mexico City; Editing by David Gregorio)