Latin American economy in 1995 was characterized as much lower growth rate, reduced inflow of external capital and increase
of foreign debt. The recession was a clear reflection of many shortcomings in the region's economy, the most evident being lack of domestic savings, heavy dependency on foreign capital,weak fiscal and monetary systems and slow increase of employment. Since the second half of 1995, however, Latin America has paid more attention to these problems.It is expected that the 1996 growth rate for the region would be more than 3%. Most countries of the region maintained
political stability. The military keeps on moving towards professionalization, thus greatly reducing the possibility of military take-over. But problems like reduced capability of administrative intervention by the government, corruption and poverty are factors easy to pose threat to political
situations in the region.Political and economic cooperation among Latin American countries continues to move forward, and subregional integration keeps on its momentum.The region's diplomacy based on economic and trade opportunities is featured as closer relations with the U. S. and the European Union. At the same time, it seems that Latin America has started to seek relations with East Europe, South Africa and East Asia.