KUALA LUMPUR, Aug 16 (Bernama) -- Malaysia's investment in real assets and infrastructure is expected to grow by 6.8 per cent, amid low real interest rates in financial markets, according to a new Institute of Chartered Accountants in England and Wales (ICAEW) report.

The ICAEW report, Economic Insight, South East Asia is produced by Cebr (The Centre for Economics and Business Research), ICAEW's partner and forecaster. The report said despite its dependence on export, Malaysia's relatively buoyant domestic demand, remains an important contributor to the country's economic growth.

However, international headwinds, could lower growth in the second half of the year, resulting in an annual average of about 3.8 per cent.

Upcoming elections may impact on economic growth but expectations are for growth of 3.5 per cent in 2013.

A recovery of its trading partners should see Malaysia's gross domestic product (GDP) rise by 4.0 per cent in 2014.

"With the availability of cheap money for ASEAN governments, we expect that public investment in needed infrastructure will increase this year," said Charles Davis, the ICAEW Economic Advisor and Cebr's Head of Macroeconomics, in a statement today.

Cheap money will allow countries in ASEAN to fund investments in public infrastructure, from transport links to education systems, while low returns in the financial markets are likely to prompt companies to invest in machinery, technology and skills instead.

The report provides its more than 138,000 members with a current snapshot of the region's economic performance.

It undertakes a quarterly review of South East Asian economies, with a focus on the six largest countries, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.