International rating agency Standard & Poor’s lowered its outlook for Brazil to ‘negative’ from ‘stable’ due to what it said were ongoing economic and political challenges faced by South America’s largest economy.

The agency also announced in a statement on Tuesday that the rating for the nation remained at BBB-, the lowest still considered as investment-grade.

“Risks have tilted to the down side” in Brazil since March, said Lisa Schineller, S&P’s primary analyst for Brazil, quoted by financial newspaper The Wall Street Journal.

There was a “greater than one-in-three likelihood” that early efforts to fix the economy could be unwound due to political issues, she added. They included reluctance by the Brazilian Congress to approve spending cuts and tax raising measures, added Ms Schineller.

Brazilian analysts polled by the country’s central bank predicted the economy would contract by 1.8 percent this year. That would be the worst economic performance in 25 years, Bloomberg news agency reported. The nation’s currency, the real, has also been down by 21 percent against the U.S. dollar so far this year, according to the report.

In a statement quoted by the Wall Street Journal – following S&P’s revised outlook on Brazil – the country’s Finance Ministry said: “The process of rebalancing our economy… is following its due course and will bring in a few months’ time new conditions of competitiveness for the Brazilian economy.”