The European Bank for Reconstruction and Development has cut its GDP growth forecast for Russia in 2013 by almost half, from 3.5 percent to 1.8 percent, a statement by the bank reads, according to RIA Novosti.

Russian economic growth slowed to 1 percent in the first quarter of 2013 from 5 percent the previous year, in part due to weakened demand on the internal and external markets and feeble production.

Analysts at the EBRD however suggest that stimulus measures could see the country’s growth potential recover to 3 percent by 2014.

However, the statement notes that these stimulus measures carry an inflationary risk and cannot themselves boost the economy’s production potential.

Economists at the EBRD note that immediate reforms are needed to stimulate growth and investment inflow in the medium-term.

They argue that growth can only be achieved by real measures to improve the investment climate, making it more predictable and transparent for both domestic and foreign investors.

The Russian Ministry for Economic Development in April slashed the country’s GDP growth forecast for 2013 from 3.6 percent to 2.4 percent. It also cut the forecast performance indicators for industrial production and investment.