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The world markets may be roiling and Tel Aviv stocks certainly have taken a beating this year, but Israel's economic fundamentals remain as strong as ever, say government officials. "There are no indications of an economic slowdown. The momentum of brisk economic growth in the fourth quarter of 2007 continued into the first quarter of 2008," stated Yarom Ariav, director-general of the Finance Ministry, at the annual conference of the treasury's accountant-general's office yesterday.

Concerned about the possible repercussions of a global slowdown on Israel, the treasury was cautious when constructing the budget for 2008, Ariav explained. For example, its growth projection for the year is lower than the actual growth achieved in 2007, yet Israel's economic indicators remain strong, he said: Disposable income per capita has increased, for one thing. Exports to the U.S. may suffer, he qualified, but he exhorted the audience to view the near future not with trepidation, but as a period of opportunity. Namely, to penetrate new markets, chiefly Asian ones.

Addressing the audience in his turn, Finance Minister Roni Bar-On urged the business community not to rest on the laurels of the last four years' achievements, but to shore up existing growth drivers and find new ones. Bar-On may have surprised some with his call to his own treasury officials to reexamine their procedures and scale back the red tape hampering private business endeavors. He also promised to pay more attention to the neglected towns outside central Israel, adding that the accountant-general's office had a central role to play in narrowing social gaps.

What are the indicators showing? One reveals that the good times continue to roll. Annualized tax collection jumped by 4% in the last few months. That's shy of the 7% rise that marked the last four years, to be sure. But at worst you could call it "a slowdown of the acceleration," not a slowdown or drop in tax collection.

Tax collection is indicative of the state of the economy. The more people earn, the bigger the bite the state takes, through income tax. And when the public has more money and the standard of living rises, then the public shops and the state gets more money from VAT and sales tax.

In the first half of 2007, tax collection increased by 15%, in annual terms, which makes the current pace of 4% look rather pale. But it isn't. The truth is that in the first half of 2007, the state received nonrecurring income, which renders the comparison unfair. When that nonrecurring income is deducted, tax collection in those six months ran at 7% in annualized terms.

And the present pace of 4% indicates that the economy continues to grow. The state is collecting more tax revenues, it's just all happening a mite more slowly. The treasury's forecast for the year 2008 is 4.2% GDP growth, which is less good than in previous years, but still a nice figure. Nor have tax-collection rates fallen short of forecasts: this year, the state has collected NIS 600 million more than it had anticipated.