Russia expects prolonged economic slump

Russia's economy is entering a period of prolonged retraction because of the dual strains of sanctions and weak crude oil markets, the Economy Ministry said.

A forecast for 2015 by the Russian Economy Ministry expects export revenues to decline as Russian energy products wane from the world market.

"Gross domestic product is expected to contract by 3 percent amid persistently strong geopolitical risks and the presumption that average annual oil prices will equal $50 per barrel," the document, released Monday, said. "Forecasts show that the Russian economy will enter a phase of a prolonged decline in 2015."

Russia's currency, the ruble, is contracting as the economy weakens. The ruble was trading near 63 to the U.S. dollar, close to a historic low.

In December, the World Bank said it expected Russia's real gross domestic product should contract by 0.7 percent. That forecast was based on oil priced at $78 per barrel, nearly 25 percent higher than the current price.

The economic issue predates the slump in oil prices. The Russian economy approached "the threshold of recession" during the first half of 2014, the World Bank said.

Sanctions imposed on Russia in response to its support for separatists in eastern Ukraine puts additional strain on the economy.

The Kremlin said the industrial sector may help offset some of the economic pain, but real disposable income should decline along with investment activity for the midterm.

Russian Prime Minister Dmitry Medvedev in mid-January said the economic situation in the country was "problematic to say the least."