Hong Kong's economic growth will slow to 4 per cent next year but is expected to reach 7.5 per cent this year, the International Monetary Fund has forecast. The stronger growth level would bring unemployment down to below 6 per cent, from the 6.8 per cent level now, while the consumer price index would grow by 1 per cent next year, the fund said. But the IMF remains concerned with the structural deficit and narrow tax base, and reiterated its call for a goods and services tax to broaden the tax base. The economic outlook follows the fund's recent review of the city's macroeconomic policies. Spurred by strong inbound tourism figures and a pick-up in global growth, it says the city's gross domestic product is expected to reach 7.5 per cent, in line with the government's forecast. The estimated growth is 2.5 to 3 per cent higher than the forecast made by the fund last year. Cautious over the negative effects of high oil prices, the fund also warned of a possible global slowdown and some 'easing of activity' on the mainland that could drag Hong Kong's growth down to only 4 per cent next year. Despite anticipated slower growth, the IMF expects the government to attain a balanced budget earlier than its target date of 2008-09 but said the operating account would remain in deficit for a longer period. The fund said the city should continue to implement measures to control the budget deficit, including monitoring civil service wages and controlling social welfare spending. 'It is essential that the authorities take advantage of the current favourable macroeconomic environment to forcefully address the long-standing structural deficit problem,' said Eswar Prasad, division chief of the IMF's Asia and Pacific department.