With energy playing a dominate role in national finances, Russia's deputy prime minister said Friday an economic contraction is possible for this year.

"Speaking about most short-term forecasts, almost everyone projects contraction of our economy," Deputy Prime Minister Arkady Dvorkovich said at an economic forum sponsored by Russian news agency Itar-Tass.

The Organization of Petroleum Exporting Countries in its market report for February said it estimated oil demand for 2016 would grow by 1.25 million barrels per day, down from the growth forecast for 2015 of 1.5 million bpd. On the economic front, OPEC said it lowered its forecast for global economic growth for 2016, with China leading the declines. The economies of Brazil and Russia, OPEC added, may dip into recession for the second straight year.

Dvorkovich said the government expects Russian gross domestic product will grow, but only by 0.7 percent for 2016. The Kremlin said earlier this week the economy was adjusting to a new reality characterized by lower crude oil prices, down $75 per barrel from mid-2014 levels.

Oleg Fomichev, the deputy minister for the economy, said from the forum the price of oil could rally up to $50 in the mid-term. That contrasts with a forecast of around $40 per barrel for 2016 from ratings agency Standard & Poor's.

Ministers from Russia, Saudi Arabia, Qatar and Venezuela this week agreed to freeze oil production at January levels in an effort to stimulate crude oil prices. The Kremlin, however, said there was still room for marginal growth in output even with the freeze agreement in place.

Dvorkovich said that, despite the uncertainty surrounding the oil economy, hydrocarbons would remain a core component of the nation's economy.

"It's a foolish thing to deny our natural wealth," he said.