The risk of the global economy falling into a recession is rising as fundamentals remain poor, analysts at Citigroup said in a note Wednesday.
"We are currently in a highly precarious environment for global growth and asset markets after two to three years of relative calm," Citigroup said, noting that global growth was "unusually weak" in the fourth quarter at around 2.0 percent on-year.
"The most recent deterioration in the global outlook is due to a moderate worsening in the prospects for the advanced economies, a large increase in the uncertainty about the advanced economies' outlook (notably for the U.S.) and a tightening in financial conditions everywhere," the bank said.
At the same time, fundamentals remain poor, including concerns about a structural and cyclical slowdown in China and its "unsustainable" currency regime, excessive leverage and rising regional risks, such as the risk the U.K. may exit the European Union, it said.
To be sure, Citigroup is defining a global recession as growth below 2 percent, differing significantly from the usual requirement of gross domestic product (GDP) falling for two consecutive quarters.
The bank also doesn't expect a global recession by any definition as its base case, forecasting global growth at 2.5 percent this year, based on official statistics, and around 2.2 percent, if adjusting for the possibility of Chinese data not being measured accurately.
Citi's estimates are significantly below the International Monetary Fund's forecast for 3.4 percent global growth this year, up from its 3.1 percent expectation for 2015. However, the IMF did warn Wednesday that it might cut its forecast for 2016.
Citigroup is particularly concerned about U.S. economic growth.
"Should the U.S. economy falter, it would be difficult to identify any major economy that could be the growth engine for the world in the near-term," it said, noting that China's growth is slowing.
U.S. growth doesn't need to slow much for the global economic outlook to darken, Citigroup said.
"A material slowdown in the U.S., even short of a recession, would still be a major headwind for the world economy: at this point, it could make a global recession according to our definition almost unavoidable," it said. "The damage to global growth conditions would come from three sources: deteriorating financial conditions globally, weaker demand from the U.S. and weakening (consumer and business) sentiment more broadly (through contagion)."
It sees another concern: Major central banks may not step up.
"Prior periods of serious economic weakness elicited major policy responses," it said, citing quantitative easing from the Federal Reserve and the European Central Bank (ECB). "No such major stimulus may be forthcoming any time soon during the current period of weakness."
That may exacerbate the growth risks, Citigroup said.
"Currently, there are doubts about the prospects for an effective policy response in the event of a downturn in many economies, which may make households, businesses and investors more cautious about the outlook," it said.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1