NEW YORK — Credit Suisse is upgrading its Venezuela 2021 gross domestic product growth forecast to 5.5% from a previous projection of 4% as the nation’s oil production improves and amid faster-than-expected return-to-normal mobility levels. The country’s growth, however, will likely underperform Latin America’s projected economic recovery while inflation will still reach 915% this year, the investment bank says in a report.

“All data available continue to suggest that the economy will grow this year for the first time since 2013, in line with our long-held forecast,” economist Alberto J. Rojas wrote in a research note to investors. Factors fueling the economy “include the positive income effect from high oil prices and the widespread use of foreign currencies in everyday activities,” the analyst added.

At the same time, social mobility as of late September “was above the pre-pandemic baseline, a much faster and stronger recovery than the one we initially envisioned,” the analyst argues on the report dated October 1. The investment bank also revises its 2022 real GDP growth forecast to 4.5% compared to 3% previously, “though mobility appears higher than in the rest of the region.”

A Triple-Digit Inflation

The report highlights the current negotiations between the government led by President Nicolas Maduro and some parts of the opposition as well as the opposition’s decision to participate in an electoral process for the first time since 2018 when in November the South American nation holds mayoral and gubernatorial elections.

“It is far too soon to think that an end to the political impasse will come from these talks, but this is finally a positive sign,” Rojas argues in the report. “A bit of growth and a bit of improvement in politics? Maybe the country is finally entering into a new phase.”

Even with the economy set to recover Venezuela will endure a high inflation despite the government’s decision to remove six zeroes from the bolivar starting in October, the report said. “We have long noted that bolivar inflation no longer has the impact in real activity it had in the past. However, as a reference, we are revising our 2021 year-end annual headline inflation forecast to 915%, from a previous estimate of 1,950%.”

The investment banks sees Venezuela’s inflation ending 2022 at about 800%.