The economy has started to recover from the global crisis earlier than forecast, boosting tax revenues and bringing government spending to below target, the Bank of Israel said, in a report released on Sunday. "The recovery in the local economy was led mainly by a modest increase in private consumption and rise in demand, as well as growth in global trade and the rally in stock markets," the Bank of Israel in the report on economic developments from May to August. In a note to investors, investment bank Barclays Capital predicted that the Tel Aviv-25 Index will "overthrow the 2007 peak near 1,250 points in the second half of 2010." On Sunday, the TA-25 Index fell by 0.5 percent, to 1,029. The central bank report found that although tax receipts over the period were lower than last year, there was a positive change in direction. "After the fall in tax revenues in 2008, the downward trend stabilized in recent months. Tax receipts were higher than forecast in the budget estimate for 2009, mainly due to growth in indirect taxes. On the basis of this positive surprise, the government is expected to meet the enlarged deficit target for 2009, which is set at 6% of gross domestic product. From the beginning of the year through August, government spending has been NIS 4.1 billion lower than the target, and the government is considering bringing forward planned expenditures for 2010." At the same the central bank warned that Israel's growth was dependent on a continued recovery of the global economy, which is still coping with the repercussions of huge deficits and expensive government stimulus programs. Defending its daily dollar-purchase program, the central bank said that during most of the reported period, the policy helped to moderate the sharp appreciation of the shekel against the dollar. In the May to August period the shekel gained 4% against the basket of currencies. "The appreciation of the shekel against the basket of currencies during the reviewed period is mainly attributable to exchange rate trends around the world, including the weakness of the greenback, the surplus in Israel's current accounts in the first half of the year and optimistic projections that the Israeli economy will recover sooner than other markets," the central bank's report stated. The bank started to make set daily purchases of $100 million in March 2008, to stem the dollar slide against the shekel. As a result, foreign-currency reserves were pumped up to $52 billion at the end of July, up from $32b. in the same month last year. In August, the Bank of Israel changed its interventionist policy and announced that it will end set daily purchases and "act in the foreign-exchange market in the event of unusual movements in the exchange rate that are inconsistent with underlying economic conditions, or when conditions in the foreign-exchange market are disorderly." At the end of September, Israel's foreign exchange reserves grew to a record of nearly NIS 60b., an increase of NIS 2.2b. from the previous month, out of which NIS 1.7b. were Bank of Israel purchases.