(Adds current account data, analyst, background)
By Anna Mudeva and Tsvetelia Ilieva
SOFIA, Nov 14 (Reuters) - Bulgaria's annual growth rate slowed to 5.6 percent in the third quarter as consumers felt the pinch of a global financial crisis and its current account deficit soared, pointing to more trouble ahead.
The Balkan country's economy grew by a real 7.1 percent year-on-year between April and June and by 7.0 percent in January-March, the statistics office's preliminary data showed on Friday.
Its current account deficit, Bulgaria's economic Achilles heel, widened to 15.8 percent of this year's expected gross domestic product in the first nine months of 2008, and ballooned to 26.5 percent of GDP in the year to September.
Wide external deficits have been at the heart of banking and debt crises for some of central and eastern Europe's new EU members since the collapse of Lehman Brothers in early October, though Bulgaria has looked fairly resilient so far.
Bulgaria's economy has thrived in the past decade on the back of growing foreign investment, credit expansion and consumer demand as people rushed to take loans to buy imported goods after decades of communist austerity.
But booming growth has come at the expense of a heavy dependence on foreign cash to fund a huge current account deficit, which makes the European Union newcomer vulnerable at a time of tightening global credit conditions.
The Baltic states, which have similar problems, have already entered recession and some analysts say Bulgaria may follow suit.
The Bulgarian government, which has played down the impact of the financial turmoil, sees growth of 6.5 percent this year and 4.7 percent next year. Most economists, however, expect growth to fall below 3-4 percent next year.
"I expect a further slowdown and growth of below 4 percent next year," said Agata Urbanska, emerging market analyst at ING. "How much below will depend on exports performance ... because domestic demand is definitely going to moderate significantly."
The statistics office data showed growth in consumption, which had been the main driver behind booming credit growth and imports in the past years, decelerated to 3.0 percent from 4.8 in the second quarter as banks reduced lending.
Industry and services growth also slowed to 4.3 percent and 3.5 percent, respectively, in the third quarter from 7.2 and 5.8 percent in the second.
Bulgaria's metals, mining and chemicals businesses have been hit by a global drop in commodity prices and weaker demand in recession-hit western Europe, Bulgaria's main exports market. Some firms have halted output, while others cut staff.
The credit crunch has also cut foreign investment, most of which went into real estate and related services in the past years. Central bank data showed on Friday that Jan-Sept direct investment (FDI) fell to 3.66 billion euros from 4.72 billion a year ago.
That covered only 68 percent of the current account deficit for the first nine months of the year.
Analysts expect Bulgaria's external gap to narrow slightly next year as imports will shrink on the back of weaker domestic demand and lending.
Import growth slowed to 2.9 percent in the third quarter from 13.7 percent in the second, the statistics office data showed. Export growth also fell to 3.9 pecrent from 5.1 percent in the previous quarter but exceeded imports.
The statistics office will publish more detailed data on the third quarter on Dec. 15. (Reporting by Anna Mudeva and Tsvetelia Ilieva; editing by Patrick Graham)