"Unemployment has fallen to record levels," the IMF said, adding that the job offers-to-applicants ratio remains high.

"Exports picked up in the second part of 2016 in line with rising global demand," the IMF also said.

"The currently favorable economic environment is an opportunity (for Japan) to accelerate reform," the IMF stressed.

It called on Japan to implement a "comprehensive and mutually reinforcing package of accelerated structural reform, coordinated monetary and fiscal support."

To address "tepid" domestic demand, the Japanese government's work style reform, including promoting equal pay for equal work, and reducing overtime, has "important potential," the IMF noted. (Jiji Press)