The Czech economy should recover in 2014 posting a growth of 2.2%, consultancy Ernst & Young said in a new forecast improving its previous estimate of 1.9% mainly due to the central bank’s foreign exchange interventions aimed at keeping the koruna weak.

E&Y believes that rising exports will also stimulate domestic demand as firms expand capacity and increase their demand for labor. This will help the economy to expand by around 3% from 2015 to 2017, according to E&Y’s latest Rapid-Growth Markets Forecast published in February.

The weaker Czech currency will also prevent inflation from falling too far. The average inflation is projected at 1.7% in 2014 and at 1.9% in the next three years. This will lower real interest rates, encouraging companies and households to boost their investment and spending. According to E&Y, the Czech central bank will keep the koruna weak at least until early 2015.

The recovery in the euro zone, which buys some 63% of Czech exports, will support growth in the Czech Republic. According to an analysis of E&Y the country will benefit the most in CEE from the euro zone recovery thanks to its strong banking sector with the share of non-performing loans the lowest, along with Poland, and the loan-to-deposit ratio below 100% suggesting that the Czech Republic has a significant potential for expanding credit without requiring support from parent banks. Yet, E&Y cautioned that growth might be held back by possible tensions within the newly formed governing coalition.