* Trump, China are major concerns for German exporters
* BDI expects exports to grow 2-3 pct this year
* Construction boom to continue, sales to rise 5 pct
(Changes slug, adds construction data, background)
By Gernot Heller and Klaus Lauer
BERLIN, Jan 10 The German economy could face
headwinds from a protectionist U.S. trade policy and excessive
state interference in China, the BDI industry association said
on Tuesday, projecting a 1.5 percent expansion in Europe's
biggest economy this year.
Economists have been urging the German government to pursue
reforms and increase investment in digitalisation, research and
development, infrastructure and education to lay the foundations
for a new economic cycle - one less reliant on exports.
"In view of global political uncertainty that particularly
threatens our national economy, future growth is anything but
self-evident," BDI President Dieter Kempf said.
"The key is proactive state investments in our roads, energy
and digital networks as well as in education," Kempf said.
The BDI, which has forecast growth of 1.9 percent for 2016,
said it expected exports to rise 2-3 percent this year and up to
half a million people to join the work force.
The Federal Statistics Office will release growth figures
for 2016 on Thursday. The government expects the economy to have
grown by 1.8 percent last year, the strongest expansion in half
Looking ahead, German exporters, whose sector remains key to
the economy despite a weakening in recent years, fear that a
protectionist trade policy under Trump would hurt their
Kempf warned against any attempt to seal off the United
States and limit free trade.
"This would damage the whole global economy and in
particular the export-oriented German economy," he said.
State interference in China was also a worry for German
firms doing business there, he said.
Most economists expect economic growth to slow this year as
the three main economic drivers - construction, consumption and
government spending - lose some momentum.
These three sectors have benefited from low interest rates,
which are unlikely to fall further. This, coupled with rising
inflation and expectations of a stagnating unemployment rate,
may dampen growth.
Nevertheless, economists expect growth to slow only
gradually in coming years.
The construction sector is forecast to continue its solid
performance, helped by the housing shortages and low interest
rates that have encouraged more people to buy homes instead of
Construction industry associations said on Tuesday they
expected sales to rise by 5 percent this year and hit a 20-year
record, following growth of 5.8 percent in 2016.
"The German construction industry is heading into 2017 with
great confidence," said the leaders of the Deutsche Bauindustrie
and Deutsche Baugewerbe in a statement. "As seen last year, the
driver will be residential construction with growth of 7
They said the main risk to the sector was a looming shortage
of skilled workers.
(Writing by Joseph Nasr and Madeline Chambers; Editing by Hugh