October 5, 2016 / 8:57 AM / a year ago

UPDATE 1-German engineering output seen rising 1 pct in 2017 -VDMA

* German engineers can benefit from drive to automate -VDMA

* China is “great unknown”

* U.S. election, Brexit among other risks (Adds details on risks, quote from VDMA president)

FRANKFURT, Oct 5 (Reuters) - German engineering output is expected to rise by 1 percent next year after a flat 2016 as demand for factory machinery to raise productivity outweighs weak economic growth and political risks in major export markets, industry association VDMA said.

German mechanical engineering firms are in a position to benefit from rising demand from countries where production is becoming more automated, the VDMA said on Wednesday.

But the risks from lower raw materials prices, political crises, the U.S. presidential election and Britain’s decision to leave the European Union pose a challenge, it said, while China’s development was “the great unknown”.

“The list of factors dragging on growth is long, and we must be careful that Germany does not fall behind technologically because of its persistent weakness in investing,” VDMA President Reinhold Festge said in a statement.

The VDMA represents industrial groups such as Siemens and Kuka as well as many smaller, family-owned firms who together generated 218 billion euros ($245 billion) of sales in 2016 and employ more than a million people.

In another positive sign for German manufacturers’ economic outlook, the BGA trade and wholesale association said on Tuesday it expected German exports to grow by up to 2.5 percent in 2017 after cutting its forecast for this year to a maximum of 2 percent export growth. ($1 = 0.8913 euros) (Reporting by Georgina Prodhan; Editing by Harro ten Wolde and Louise Heavens)

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