Russia's economic ministry on Thursday slashed the country's 2013 growth forecast to 2.4 percent from 3.6 percent amid a slowdown in both industrial output and consumer demand.
Deputy Economic Development Minister Andrei Klepach also lowered the direct investment growth outlook to 4.6 percent from 6.5 percent.
Klepach attributed the downgrades to flat Russian export growth that analysts blame on stalling industries and slowing business investments.
"This is because our export (growth) is zero and our investment growth is 4.6 percent. That is not strong growth," news agencies quoted Klepach as saying in explanation of the downgrade.
"Inflation will stand at 5.8 percent while capital outflows (for the year) will reach 30 to 35 billion dollars," he added.
The announcements come at a worrying time for the Russian economy.
The central bank is fighting the twin battles of reining in an inflation rate that has outpaced expectations while at the same time figuring out a way to spur decelerating growth.
Russian President Vladimir Putin had originally set his government the target of achieving four percent economic expansion -- a modest figure for an emerging economy that should be benefiting from favourable prices for its energy exports.
Four percent growth is just half that experienced before the 2008-2009 global financial crisis and insufficient for Russia to catch up with the living standards of Western Europe and the rest of the developed world.
But even that figure has proven difficult to atttain and analysts expressed little surprise that Klepach put the forecast still lower.
"It is not promising but it is not surprising," said chief Renaissance Capital economist Ivan Tchakarov.
"All the indicators have been pointing in that direction."
Analysts put some of the blame on continuing problems in Europe that result in lower demand for Russia's natural gas.
But they also pointed to drooping business confidence and emerging consumer disinterest in spending -- a primary factor behind Russia's growth of recent years.
"It is a combination of lower investment, lower consumption and the fact that the external backdrop has been worse than expected," Tchakarov said.
Russia's industrial production has been particularly hard hit. It shrank by 2.0 percent in annual terms in February after declining by 0.8 percent the month before and is not expected to rebound much in March.
Klepach still forecast a 2013 industrial production growth rate of 2.0 percent. But analysts at Capital Economics in London said this sector is "suffering the most".
Retail sales in February meanwhile grew at the slowest pace in three years.
"This is consistent with household consumption growing by around three percent year-on-year in the first quarter, less than half of the 6.5 percent year-on-year (growth) recorded over the course of 2012," Capital Economics said.
Economists further noted that these lagging numbers come against the backdrop of record low unemployment -- a sign that Russia's human resource capacity is being used to the utmost.
"This in turn implies that the ongoing slowdown in the Russian economy is not just a temporary blip but, more likely, marks the beginning of a new period where much weaker growth becomes the new norm," Capital Economics observed.