President Dilma Rousseff, whose approval ratings last month plunged to a record low of 8%, has enforced a tough austerity programme to curb spiralling inflation and bring down the budget deficit, but it has proved deeply unpopular among her political allies and fellow ministers. But the country recently fell into recession, and there are major concerns about the future of the economy, the currency and most importantly, Brazil’s leadership.

Rousseff’s left-wing government had already imposed austerity measures causing a public outrage.

According to market analysts, the downgrade, though widely expected, came earlier than many forecast and would impact companies which have exposure to the Latin American country.

One of the major culprits of the downgrade S&P cited was political gridlock, which is presenting a challenge to reversing the downtrend, as the legislative branch of Brazil’s government, the National Congress has repeatedly rejected program cuts and tax increases as a way to shore up Brazil’s deteriorating finances. The outlook on the new rating remains negative, which means additional downgrades are possible in the near term.

Moody’s Investors Service downgraded Brazil less than a month ago to the brink of junk, but said its investment grade was safe for now.

But economists say the government has little incentive to ignore investors if it wants to avoid further downgrades by other rating agencies, a move that would make borrowing even more costly and further undermine market confidence.

The lawmaker was referring to the millions of people who have taken part in rallies to protest Rousseff’s administration, some of whom have called for her resignation or ouster.

The only bright spot being the improvement in current account, she said. Rousseff has been unable to find support for her initiatives amid an investigation into corruption at the state-controlled oil company Petrobras.

Levy said the measures would help the country, winded by the collapse of a global commodities boom that fueled an export bonanza for Brazil, adjust to lower growth and demand in China.

The outlook on the brand new score stays unfavourable, which suggests further downgrades are attainable within the close to time period. “We are still looking at a comfortable primary surplus at 1.5 percent of GDP”, he said.

The U.S.-based Eurasia Group political and economic risk consulting firm said in a Thursday note that the because of the downgrade Levy’s standing has become more precarious.

Brazilian President Dilma Rousseff called an emergency cabinet meeting Thursday in order to combat falling revenue and rising debt.