Financial turmoil results in recession in the US

The United States may face a recession from the ongoing financial turbulence in view of the impact of financial crisis around the globe over the past 30 years, the International Monetary Fund said on Thursday.


"The financial turmoil that began in the summer of 2007 has mutated into a full-blown crisis," the IMF said in part of its twice-yearly World Economic Outlook report, citing "a substantial likelihood of a sharp downturn in the United States."


The warning is in stark contrast to the Washington-based institution's projection in July that the United States will "contract moderately" in the second half of this year before recovering next year.


It also came as the US Congress works to pass a USD 700 billion financial bailout bill to prevent the economy from collapsing.


The report suggested the risk of recession is higher when financial turmoil is preceded by rising house prices and rapidly expanding credit, which was the case in the United States.