The International Monetary Fund is calling on Germany to use the "still sizable fiscal space" in Europe's biggest economy to increase public investment.

The German economy expanded last year by 2.2 percent, the strongest showing in six years. A similar performance is expected this year, and the government said last week that solid growth and low unemployment should boost its tax take over the coming years.

However, a regular IMF report issued Monday said "further policy action is needed to more decisively boost domestic investment, which would also support external rebalancing." It urged investments in areas such as childcare, transport and digital infrastructure.

It said the positive economic situation "provides an opportunity for the new government to take more forceful policy actions," though welcoming measures agreed by the new administration.