Russian economic growth is expected to fall below 1 percent in part because of investment uncertainty and sanctions pressure, a minister said Tuesday.

Deputy Economy Minister Alexei Vedev said he was revising the outlook for the economy next year, downgrading from an initial expectation of 1.2 percent growth.

"We have revised this year's gross domestic product forecast to a 0.6 percent growth against 0.5 percent growth in the previous forecast," he said. "Also, we considerably reconsidered the GDP forecast for next year -- the current version is based on the assumption of a 0.8 percent fall."

Kremlin officials have said Russian oil output might be curbed by market mechanisms resulting from the low price of crude oil, while Russian President Vladimir Putin said there would be no increase in state deficits despite sanctions on Russian energy companies.

Exports of crude oil, petroleum products and natural gas accounted for 68 percent of all export revenues for Russia in 2013.

An annual report from the European Commission said the Russian economy was entering a period of stagflation and Russia's currency is trading at historic lows against the U.S. dollar.

With the value of the Russian currency falling, the deputy minister said the budget losses for Russia next year could be as high as $1.7 billion.

"A sharp decrease in oil prices led to a decline in the ruble rate and higher capital outflow," he added.

The issue is compounded by sanctions and European legislation aimed at the Russian energy sector. Western sanctions were imposed in response to the Kremlin's stance on crises in Ukraine.