WASHINGTON, April 2: US Federal Reserve Chairman Ben Bernanke conceded for the first time on Wednesday that the US economy may go into recession, endorsing a similar prediction by the International Monetary Fund.

In his opening remarks to the Joint Economic Committee of Congress, Mr Bernanke acknowledged that the economic outlook has worsened since the Federal Reserve’s economic outlook was released in January.

Also on Wednesday some US media outlets published excerpts from a twice-yearly World Economic Outlook report the IMF is expected to release next week.

The IMF cut its forecast for global growth this year and said there’s a 25 per cent chance of a world recession, citing the worst financial crisis in the US since the Great Depression.

The IMF expects the global economy to grow 3.7 per cent in 2008. In January, the IMF had announced a projection of 4.1 per cent.

The IMF slashed its US economic growth forecast to 0.5 per cent from 1.5 percent and expects the worlds’ largest economy to slip into recession. According to the document obtained by Bloomberg News, IMF expects the US economy to grow 0.6 per cent in 2009.

In his testimony before the congressional panel, Mr Bernanke warned that the US housing crisis that triggered the economic slump will deteriorate, unemployment will rise and there will be a decline in consumer spending as well.

The assessment is so far the bleakest on the US economy. Coming from an official who heads America’s central banking system and is the most important decision maker of US economic policies, it sounds particularly alarming.

“It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Mr Bernanke said, although he said that he believes the economy will rebound in the second half of the year.

One of the short-hand measures of whether a nation is suffering from a recession is two or more consecutive quarters in which GDP, the broad measure of economic activity, is negative.

Commenting on Mr Bernanke’s testimony, CNN noted that “his statement seems to suggest that could well occur in the just completed first quarter and the second quarter that started Tuesday.”

Bloomberg News reported earlier that the US economy grew at an annual pace of 0.6 per cent from October to December. Growth probably slowed to a 0.2 per cent annual rate in the first quarter.

Mr Bernanke told lawmakers that the Federal Reserve’s emergency loan to Bear Stearns Cos. followed a March 13 warning by the company that “it would have to file for Chapter 11 bankruptcy the next day.”

Two weeks ago, the Federal Reserve backed Bear Stearns’ takeover by JP Morgan Chase and lowered interest rates by 0.75 percentage point to bolster a market shaken by the news of the takeover.

“With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence,” Mr Bernanke said.

Mr Bernanke, however, said that there was no danger of a long-term economic recession in the United States as he expects the economy to return to its long-term growth pace in 2009.

The Federal Reserve chairman also acknowledged that “in light of the recent turbulence in financial markets, the uncertainty attending this forecast (of recession) is quite high and the risks remain to the downside.”

But he assured the markets that “monetary and fiscal policies … should support a return to growth in the second half of this year and next year.” He said he expects that the rate cuts and financial-market actions this year “will help to promote growth over time and to mitigate the risks to economic activity.”

Traders expect the Federal Reserve to lower the overnight inter-bank lending rate by a quarter-point at the next Federal Open Market Committee meeting on April 29-30.