The B.C. economy continues to gather momentum and is expected to achieve the third-highest provincial growth rate by 2002, TD Bank says.

In its latest quarterly forecast, the bank projects that economic growth in B.C. will approach three per cent this year. Although that level of growth would rank a lowly seventh among Canadian provinces, it would be B.C.'s strongest performance since 1994.

And with improving consumer and business confidence, the economy is expected to vault into third place (behind Newfoundland and Alberta) in provincial GDP growth rankings by 2002.

Derek Burleton, senior economist for TD Bank Financial Group, attributed the favourable trend to a bounce-back in B.C.'s resource-based industries, which has enjoyed strong U.S. demand and rising prices for newsprint, pulp, copper and natural gas.

But he said the biggest story this year has been the uptick in consumer spending.

"B.C. consumers appear to have ended their two-year hibernation, as evidenced by a marked acceleration in retail sales and sales of new motor vehicles this year."

Although the pace of homebuilding is lagging, it should begin to firm by next year, he said.

Burleton said another reason for increased optimism in the medium term is the B.C. government's unexpected surplus in the past fiscal year.

On a dimmer note, he said the provincial government has indicated that, while another balanced budget is in store for the current fiscal year, there will not be much room for additional tax cuts in the 2001 budget.

"A strategy devoid of new tax relief in British Columbia would result in a further widening of the already-considerable tax gap with neighbouring Alberta, a province that has already announced plans to offer further cuts in both personal and corporate tax rates over the next few years," he cautioned.