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One of the toughest problems for macroeconomic analysts is to pinpoint a true turnaround.

They can spot it in hindsight easily enough. But it's only truly helpful when foretold. Yet this time around, three respected bodies dared to say that the turnaround isn't nigh, it's here.

The Bank of Israel published its composite index of indicators, tracking the state of the economy, and wrote: "It seems that this indicates a turnaround reflected in an increase in economic activity." Prof. Rafi Melnick of the Interdisciplinary Center of Herzliya, who publishes a competing index, ruled the other day that we "may" be at a positive turning point. And Bank Hapoalim went a step further, optimistically doubling its growth forecast for 2010.

For weeks the economic indicators have been upbeat. Last week the Central Bureau of Statistics said that Israeli GDP grew by 1% in the second quarter, in annualized terms. Meanwhile, the U.S. economy contracted by 1% and the euro zone posted negative growth of 0.4%.

If we really have turned the corner, then Israel rode through the crisis in style, for all the wails of doom we'd been hearing. ("The worst crisis since the 1930s.") We are barely even scarred.

Yet make no mistake, it isn't over. To know whether it's truly over, we have to keep a close eye on three factors. On Monday, the Bank of Israel will declare its monetary policy for September. Governor Stanley Fischer will have to choose which of two opposing forces matters more: growth or inflation. Raising interest rates would dampen inflation, but leaving the rate as is, at 0.5%, would stimulate economic growth and help relieve unemployment.

To declare victory, two things have to happen. Tax collection has to recover after long months of contracting, and unemployment has to drop. The tax-collection figures for July were excellent, bemusing the experts at the Finance Ministry, but they fear it was a fluke. The hope is that it wasn't, and that rising tax revenues will ease the government deficit, which is climbing higher by the month. (Moti Bassok)