Investors trying to cope with one of the worst starts to a year on record are beginning to weigh up the possibility of global recession, as oil prices hit 12-year lows and Chinese growth fears leave markets with little room for optimism.
With China set to release its fourth-quarter gross domestic product (GDP) numbers for December and 2015 as a whole on Tuesday, some analysts believe the recent rout in equities may worsen, with some bracing for the slowest pace of expansion since 1990.
Meanwhile, in commodity markets oil touched levels not seen since 2003, as the market tried to prepare for additional Iranian exports after the lifting of sanctions against the country over the weekend. Oil prices are now about 70 percent lower from the summer of 2014 when prices began their extended decline.
"The most evident place where we can see recession risk is credit. We are in the U.S. trading at levels seen just prior to recessions. We think that is related to what is going on in one section of the economy; in energy and mining," said Francesco Garzarelli, co-head of global macro and markets research team at Goldman Sachs.
Garzarelli said that Goldman Sachs current outlook on the risk of recession is no higher than a 1 in 5 chance, as China's impact on the rest of the world will not be as bad as many expect.
"Things could spiral out of control, we could be underestimating the severity of the downturn in China and the spillover effects, but if you do macro analysis, if you look at hard numbers, the pass through from China to the rest of the world is limited," he told CNBC.
U.S. stocks closed sharply lower Friday ahead of the onslaught of earnings season, after a slew of disappointing U.S. data, a plunge in oil to below $30 a barrel, and a sell-off in Chinese stocks added to mounting concerns about slowing global growth.
In the U.S., markets remained closed on Monday for Martin Luther King Day, but stocks ended more than 2 percent lower Friday, with the and Dow Jones industrial average still posting their worst two-week start to a year on record.
In Asia, major indexes in Australia and Japan were nearing bear market territory, down over 18 percent from their 52-week closing highs.
"You look at the U.S. earnings pattern, it is very negative, huge reductions in earnings over the last 4-5 months. I have been calling this a recession, 2016 is a year of recession. Global growth has been so dominated by China and China capital expenditure on the one hand and oil and gas on the other," said fund manager at Martin Currie, Michael Browne.
But Browne said other positive forces at work -- such as consumers continuing to benefit from a fall in oil prices, strong corporate balance sheets and a pick-up in government spending this year in Europe -- are creating a "push and pull effect"
"At the moment I am being pulled down, but at some stage those other positives are being pulled through. So I am going to say that we should be a little bit constructive on the days where everybody is losing their heads," he added.
Oxford Economics expects advanced global growth to average 1.9 percent per year in 2015-2024, marking a large improvement from 2007 – 2014 when growth for this group averaged only 1 percent.
But as the 2007 – 2014 period featured the "deepest recession since World War II", this forecast does not look so good when compared to a longer-term time horizon.
"Our numbers for 2015-24 are below the 1990-2014 average of 2.1 percent per year and far below the 2.8% percent per year average seen in 2004-2007," said senior economist at the group, Adam Slater.
"So this still looks like a subdued recovery, especially given our estimates continue to suggest considerable economic slack exists in many of these economies," he added.