The World Bank has announced a gloomier economic forecast for Russia as oil prices fall.

In a revised outlook on the nation’s growth projections, the Bank said Russia’s economy would shrink by 0.7% next year.

Its forecast is based on the “most likely” scenario of crude prices averaging at $78 (£49.7) a barrel in 2015.

If oil prices fell to $70 (£44.6) per barrel, Russia’s output would shrink by 1.5% and households would remain in “a crisis mode” for 2015 and 2016, the report said.

Birgit Hansl, World Bank Lead Economist for the Russian Federation added: “In the baseline scenario, investment is projected to contract for a third year in a row in 2015 because of continued uncertainty, restricted access to international financial markets by Russian companies and banks and lower consumer demand.

“For companies in the natural resource sector, lower oil and commodity prices are expected to negatively affect investment decisions. For the first time since 2009, consumption is expected to decline, following a negligible expansion in 2014.”

Growth could however rebound to 0.3% in 2016 if oil price rises to $72 (£45.9) a barrel.