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Davos WEF

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Russia's economy is seen shrinking another 1 percent this year, but the head of the $10 billion Russian Direct Investment Fund (RDIF) told CNBC the situation was under control.

Kirill Dmitriev, the CEO of RDIF since 2011, said that while Russia was in "crisis," due to the slump in oil prices and the international sanctions on the country, he remained optimistic and saw the situation as an opportunity to restructure.

"It could have been much worse (the forecast decline); we believe it is sort of okay," Dmitriev told CNBC.

He attributed around 80 percent of the economic decline to falling oil prices and 20 percent to sanctions.

"Russia is dealing with this crisis; it is an opportunity for restructuring; it is an opportunity to reduce state involvement because of privatizations, so it is a situation that is controllable," the Ukrainian-born businessman told CNBC from the World Economic Forum in Davos, Switzerland on Tuesday.

The Russian economy shrunk by a steep 3.7 percent last year, in part due to continued low oil prices and the hit from Western sanctions. On Tuesday, the International Monetary Fund (IMF) cut its outlook for the Russian economy for 2016, forecasting contraction of 1 percent.

Kirill Dmitriev on set with CNBC's Steve Sedgwick and Geoff Cutmore at Davos, Switzerland in 2016.

"It is an opportunity for the Russian economy to restructure, but definitely, there are a lot of economic challenges ahead," he told CNBC.

While declining oil prices have hit the economy, Dmitriev said that the weak ruble had helped other sectors, such as agriculture.

The Russian Direct Investment Fund (RDIF) is worth $10 billion and was established by the Russian government to make equity investments, mainly in the domestic economy.

RDIF has partnered with funds in France and Italy, but mainly with those in emerging markets. Efforts to court non-Western powers have intensified since sanctions were imposed on Russia, following its incursion in Ukraine in 2014. Partnerships including a $2 billion Russia-China Investment Fund and joint ventures with India and Gulf states like Qatar and Saudi Arabia.

Last week, the Russia-China Investment Fund announced it had purchased 23.1 percent of JSC Detsky Mir from CJSC DM Finance, a subsidiary of Sistema, for 9.75 billion rubles ($0.12 billion).

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The chief economist of IHS told CNBC that another cause of Russia's recession was its previous unfriendliness to foreign investment.

"There is a triple whammy here. Certainly oil is a very big part of it; no question sanction are a part of it… But Russia was very unfriendly to foreign direct investment. Essentially their message was we can do this alone we don't need any investment," Nariman Behravesh told CNBC off camera on Tuesday.

His research firm is more bearish on Russia than the IMF, forecasting its economy could contract by near to 2 percent in 2016.

"We are seeing a very weak recovery next year," Behravesh added.

"The risk is there is no recovery next year… If oil prices stay low, at around $30 or $35, next year, they are in for another year of pain."