HOUSTON (ICIS)–Fitch Ratings warned that Brazilian corporate ratings could slip into speculative or junk status because of falling commodity prices and the country’s economic, fiscal and political problems.

Debora Jalles, Fitch director, said on Monday that cash flow from operations could fall to levels not seen in the past decade.

“Declining demand, increasing unemployment, persistently high inflation and interest rates, depressed commodity prices, foreign exchange volatility and tight credit markets have collided to create a perfect storm, with Brazilian corporates smack in the middle,” Jalles said.

Among the companies in Fitch’s Brazilian portfolio, 53% have a negative outlook, while just 6% have a positive one, the ratings agency said.

Fitch expects downgrades will outpace upgrades by 10-1 this year. That compares with 4.4-to-1 in 2015, 2.8-to-1 in 2014 and 0.5-to-1 in 2004-2013.

In all, only 19% of the companies issuing debt have the strength to withstand this year’s challenges without significant damage to their credit profiles, Fitch said.

The Central Bank of Brazil did not release the results of its weekly survey of economic forecasts on Monday because of the Carnival holidays.

However, the survey from the previous week shows that GDP should contract by 3.01%. Inflation should continue to run above the central bank’s 2.5-6.5 target, reaching an average of 7.26%.

The exchange rate should reach an average of reais (R)4.20 to the dollar.

Inflation has remained persistently high despite Brazil’s interest rate of 14.25%. Economists doubt that the central bank will increase rates further.

Fitch has already downgraded its ratings for Brazil’s sovereign debt to its speculative grade of BB+. It left open the possibility of more downgrades because of the country’s numerous challenges.

Fitch expects Brazil’s debt load to continue rising, surpassing 70% of GDP this year and growing further in 2017.

Brazil’s fiscal accounts are under pressure from its deep recession, a growing social-security deficit and demands to dilute austerity measures, Fitch said.

The pending impeachment proceedings against President Dilma Rousseff make it increasingly unlikely that it can push measures through the legislature that could improve the country’s finances, Fitch said.