Although growth continued in the first half of the year, the Bank of Israel said Wednesday that the economy was in its "advanced phase" of growth, signaling the end of a growth cycle. In its publication Recent Economic Developments, a report covering the period from January to June 2007, the central bank highlighted lower unemployment rates, an increase in domestic demand and investment in fixed assets as the main drivers of the continued growth in the economy. As a result of this positive catalysts, private per capita spending, in other words, per capita standard of living increased by 10 percent in annual terms in the first six months of the year. In the first quarter, gross domestic product grew at an annual rate of 6.3%, while business product grew at an annual rate of 6.5%. At the same time, unemployment rates fell to 7.7% in the first quarter of 2007 from 7.8% in the last quarter of 2006 and participation in the labor force rose to over 50%. Looking ahead, the central bank said the government's budget deficit for 2007 might be lower than the annual ceiling of 2.9% of GDP set previously. Current estimates by the Bank of Israel for the 2007 budget deficit stood at less than 2% of GDP. Furthermore, the Bank of Israel explained that the bank's monetary policy of cutting interest rates was tailored to bring inflation back into the price stability target range of between 1% and 3%. "The policy increased the likelihood for the inflation rate to move back into the target range by 2007," the bank stated.