Dec. 24 - The euro zone survived 2013, and the hot phase of the crisis appears to be over as the latest news coming out of the bloc is more positive. But challenges remain, and as Joanna Partridge reports, analysts warn the region will struggle for many more years with low growth and high unemployment, unless leaders keep going with tough reforms.
Heavy smog over Athens - and recession's to blame. Cash-strapped Greeks have stopped buying heating fuel and turned to wood fires to heat their homes - leading to air pollution. The government's so concerned it's issued a health warning, and offered free electricity to the poorest in the most polluted areas. The outlook for Greece is actually brighter than the skies - the government expects the economy to finally start growing again in 2014. In Greece and the rest of the euro zone, the hot phase of the crisis appears to be over, says Myles Bradshaw from PIMCO. SOUNDBITE: Myles Bradshaw, Portfolio Manager, PIMCO, saying (English): "I think we're probably past the worst of it, which is big question mark about whether the ECB is the lender of last resort. The issues remaining are about growth, sustainable growth, which is necessary to call it over. And the second issue is about reform, so when the next crisis hits, whenever that may be, the euro zone is able to handle it." Another year of crisis draws to a close, and the euro zone survived intact. The latest news is more promising. Ireland successfully exited its three-year bailout programme on schedule, and Spain exited recession. But the bloc's unemployment rate is still over 12% - and much higher in Greece and Spain. The return to growth doesn't solve all problems, says Juergen Michels from BayernLB. SOUNDBITE: Juergen Michels, BayernLB, saying (English): "We are looking forward to quite low growth over the next couple of years. Partly because of the way the outlook for most of the periphery economies still looks very bleak, the structural reforms will not work immediately. And the other thing is that in 2014 we have some reduction in the fiscal tightening." Euro zone leaders have been making slow progress towards banking union. But some feel it's not been properly completed, says Sony Kapoor from think tank Re-Define. SOUNDBITE: Sony Kapoor, Managing Director, Re-Define, saying (English): "This idea of a banking union, albeit however let's say, imperfect, somehow saving the day and on the one hand and the other which is ECB actions which have pulled us back from the brink may be putting further troubles in store. I think they are two themes we're going to see played out next year." Many analysts consider cleaning up banks' balance sheets a must-do. The ECB will take over supervision of banks in late 2014. It's hoped its new stress tests, the asset quality review, will be tough enough and create a healthier banking system Protests against austerity and budget cuts continue - this one in Belgium just the latest. While voters may be hoping to bid farewell to cuts, analysts are urging leaders to stick to their guns. They may no longer be fighting the fires of crisis, but slowing down their reforms might prevent them from being able to rebuild a strong economy.