(ANSA-AFP) - BERLIN, APR 1 - Leading economic institutes more than halved their growth forecast for Germany on Wednesday, warning that the energy shock caused by the Middle East war would hit Europe's top economy hard. A group of leading institutes slashed their joint GDP growth forecast for 2026 to 0.6 percent, down from a September prediction of 1.3 percent. Inflation is now forecast to rise to 2.8 percent, up from 2.0 percent, "weighing on household purchasing power". "The energy price shock triggered by the Iran war is hitting the recovery hard," said economist Timo Wollmershaeuser of the Ifo institute, adding that increased government spending was nevertheless "preventing a stronger slide". Oil and natural gas prices have surged since the end of February, when the United States and Israel attacked Iran, killed its supreme leader and plunged the Middle East into war. Iran has since closed the Strait of Hormuz to ships of countries it considers allied with the US and Israel, effectively blocking a sea lane that normally transports about a fifth of the world's oil and liquefied natural gas. Higher inflation in Germany would hit consumer spending, the institutes said, weighing on an already weak economy that has barely grown since a burst of pent-up demand after the Covid pandemic in 2022 (ANSA-AFP).