Treasury Secretary James A. Baker III hinted strongly yesterday that the world's major industrial nations soon would pressure West Germany to expand its weakening economy.

Baker, in a question and answer period following a speech at the Institute for International Economics, said a new system of "indicators" being worked out to provide mutual surveillance of the major nations' economies "did pick up the decline in German economic growth."

The West German Ministry of Finance announced Sept. 1 that second-quarter gross national product was up only 1.5 percent from the first quarter and 0.8 percent from the second quarter of 1986.

Under the surveillance system, further stimulus for the German economy would be indicated. The system was endorsed by the seven major industrial nations -- the United States, Canada, Britain, France, Italy, West Germany and Japan -- at a summit meeting in Venice last June. The system is scheduled for review next month at the annual meetings of the World Bank and International Monetary Fund.

Baker recalled that the German government in May promised stimulative action if the economy should falter. At that time, German officials spoke of additional expansion measures if the growth rate fell below 2 percent.

But Baker's praise of the surveillance system as an effective tool to enhance the coordination of economic policy was challenged by Otto Lambsdorff, former minister of economic affairs for West Germany. Lambsdorff questioned Baker from the floor, arguing that unless "the political decisions" suggested by the indicators are made, "the indicators don't seem to be very helpful. As far as I can see, these political decisions will not be taken."

Lambsdorff's reference was to congressional failure to make drastic cuts in the U.S. budget deficit. But Baker insisted that the United States had done a better job in cutting its budget deficit than either Germany or Japan had done in stimulating their economic growth.

All of these policy moves have been endorsed at international meetings as necessary to correct the huge imbalances of trade among the United States, Germany and Japan.

Baker acknowledged, in his exchange with Lambsdorff, "that we need a little more discipline in the {surveillance} system. We don't get there overnight, and we are a heck of a lot better off today than we were a year and a half or two years ago, when -- I can promise you -- we didn't have meaningful meetings. We had a little 'tour de table,' everybody recited what their economies' prospects were, but there never was any serious discussion of efforts at coordination. You're right, you need the political will, but first you need the political mechanism."

Baker said the emphasis on coordination of international policy since 1985 had helped make the dollar, and hence American exporters, more competitive.

He stressed, as the administration has begun to do in recent months, that there has been a decline in the U.S. trade deficit in volume terms for the past year.

"And in the last few months, we've had reasonably good stability in exchange rates, although in the long run, we must look for ways to add more discipline to the exchange rate system," Baker said.

He did not elaborate on what form that discipline might take, beyond the implication in his exchange with Lambsdorff that the indicator system eventually could be strengthened.

He would also not answer a question relating to the "target zones" for the dollar and other major currencies reportedly agreed to at his meeting with other finance minister in Paris last February.

Baker reiterated the U.S. view that the newly industrialized countries in Asia -- South Korea, Taiwan, Hong Kong and Singapore -- were contributing to protectionist pressures here by failing to open their markets, and by not allowing their currencies to move high enough to reflect their growing trade and current account surpluses.

In his formal remarks, Baker reiterated the administration position that a conference committee trade bill that resembles either the House or Senate version would not be accepted by President Reagan.

"I assure you he will not sign a bill that throws up trade barriers, tramples the delicate weave of diplomatic harmony, and wrecks our vast network of commercial relationships."

In answer to a question, he said that last month's record trade deficit report might make it a "little tougher" to get acceptable trade legislation.

"It won't make it any easier for us to avoid protectionism if the numbers do not improve on a nominal basis as well as on a volume basis, he added.