Eurozone manufacturing output fell for the seventh consecutive month in December while Russia's manufacturing sector improved at its fastest rate in nearly seven years, according to two recent analyses by S&P Global.
S&P reported that the eurozone's industrial decline was largely driven by worsening conditions in France, the bloc's second-largest economy, where business conditions fell to their lowest levels in more than three-and-a-half years.
Manufacturing in Germany, the eurozone's largest economy, also continued to deteriorate, albeit at a slightly slower pace than in previous months. Greece was the only eurozone country where manufacturing conditions improved.
Cyrus de la Rubia, the Chief Economist at Hamburg Commercial Bank, noted that the eurozone data makes for "ugly reading" and generally "paints a bleak picture" of the currency union's economy.
"[The] relentless slump in the manufacturing sector of the eurozone... indicates a sustained decline in both activity and demand for manufactured goods," de la Rubia added.
Declining prosperity
By contrast, a separate S&P analysis found that Russia's manufacturing sector had expanded at its fastest rate since 2017. The report noted the country's "sustained improvements in output and new order growth," adding that business optimism was "buoyed by a sustained rise in client demand."
The S&P studies highlight the fact that, by many metrics, Russia's economy is currently outperforming that of the eurozone.
According to the latest growth projections by the OECD, Russia's economy is set to expand by 1.1% this year – above the eurozone's growth rate of 0.9%. Russia is also estimated by the IMF to have grown at more than three times the rate of the eurozone in 2023 (2.2% compared to 0.7%).
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Russia's superior economic performance comes in spite of the fact that the EU has imposed 12 rounds of sanctions on Moscow to punish it for its full-scale invasion of Ukraine in February 2022.
Indeed, it is primarily the deteriorating relations between the EU and Russia, as well as China, which have caused Europe's economy to perform so poorly over the past two years.
Senior EU officials have recognised this: in October 2022, the European Commission's foreign policy chief Josep Borrell noted that Europe's "prosperity" was "based on cheap energy coming from Russia" as well as "access to the big China market."
Presciently, Borrell forecast that Europe's worsening relations with Moscow and Beijing "will require a strong restructuring" of the European economy that "will be tough [and] create political problems."
