SOCHI, Russia—Russia's Economy Ministry lowered its forecast for the average ruble exchange rate as the country is preparing for years of low oil prices.

Economy Minister Alexei Ulyukayev said on Saturday his ministry expects that the average ruble exchange rate against the dollar will be 63.5 rubles next year, RIA state news agency reported. Previously, the ministry had expected the ruble to average 56.8 against the dollar in 2016, which would envisage a 16% strengthening from Friday's close of 66 rubles per dollar.

Maxim Oreshkin, the deputy finance minister, told The Wall Street Journal on the sidelines of an investment conference in Russia's Black Sea resort of Sochi the latest forecast looks realistic should prices for oil, the country's key exports, average $50 per barrel.

"We think that in the next five to seven years oil prices will stay in a range between $40 and $60 per barrel. We see serious limits [for prices growth] from the consumption side and the global economic slowdown," Mr. Oreshkin said.

A recovery in oil prices will be limited as demand, linked to currently cheap crude, is set to run out of steam. Rising popularity of alternative energy sources, particularly in the auto sector, will be also playing on the downside, Mr. Oreshkin said.

Finance Minister Anton Siluanov had already said earlier this week that oil prices, Russia's key exports, won't recover as quickly as they did after the crisis of 2008-2009, some officials remain more optimistic.

Russia's energy minister said on Saturday that oil prices may recover to $60-$70 per barrel next year but in the longer run, oil prices seen averaging $50 per barrel. Leonid Fedun, vice president of Russia's No. 2 oil company Lukoil, said he hopes that oil prices will recover to $80 to $100 per barrel already next year.

Commodity prices are crucial for the Russian economy because, for years, oil and gas revenues have accounted for about half the federal budget's revenues. Lower oil prices limit the potential for Russia's economic growth because the country's economy lacks diversification and is excessively dependent on crude exports.

Economy Minister Mr. Ulyukayev confirmed that his ministry has downgraded the economic outlook, expecting gross domestic product to shrink by 3.9% this year before growing by 0.7% next year. The latest forecast is in line with the World Bank expectations, which said this week that under its baseline scenario Russia's GDP will fall 3.8% this year, returning to growth of 0.6% in 2016.

Previously, the economy ministry had seen this year's contraction at no more than 3%, betting on economic growth of around 2% already in 2016.

Write to Andrey Ostroukh at andrey.ostroukh@wsj.com

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(END) Dow Jones Newswires

October 04, 2015 20:55 ET (00:55 GMT)