The International Monetary Fund has warned Japan to not rely too much on the weak yen but to push for more reforms.
In its latest annual assessment, the IMF said it saw a "modest recovery".
But the global lender warned that further bold structural reforms were needed to lift growth and enable financial consolidation.
Tokyo's reform package dubbed Abenomics was kicked off in 2012 and aims at spurring economic growth.
The IMF projected growth to stabilise at around 0.7% over the medium term and expects inflation to gradually increase to around 1.5%, well below the Bank of Japan's target of 2%.
It said that while the continued decline of the yen was beneficial for Japan's economy, helping the country's exports sector, the outlook was negative with risks stemming from weak domestic demand and incomplete policies, particularly with regard to the fiscal consolidation and structural reforms.