An extended period of slow growth and steady increase in household debt could spark an economic crisis in South Korea, which suffered a financial crisis two decades ago, economists said Tuesday.

Seven out of 10 economists stated they believe the country could face an economic crisis within the next five years if low growth persists and household debt continues to rise, the Korea Economic Research Institute said in a statement.

In a seminar arranged by KERI on Tuesday, economists such as former finance ministry Lee Kyu-sung and Kwon Tae-shin, president of the Korea Economic Research Institute, said the country's economic fundamentals have generally weakened though the current account balance and foreign exchange reserves have improved greatly since the 1997 Asian financial crisis.

Korea's economy grew 2.8 percent last year, falling from 5.9 percent growth in 1997 and its household debt reached a whopping 1.388 quadrillion won at the end of June, according to government data. 

"The country has posted economic growth of less than 3 percent for the past two years. It also faces a widening income gap between the rich and poor and growth that does not lead to new jobs. Among other issues, the country's rising household debt is a major factor that weakens economic fundamentals," Hyun Jung-taik, president of the Korea Institute for International Economic Policy, said in the seminar.

After failing to handle the massive current account deficit and sharp rise in overseas debt, South Korea went to the International Monetary Fund in December 1997 for a bailout package worth a total $19.5 billion.

In the past two decades, only 11 out of the country's 30 biggest conglomerates survived the turbulence caused by the so-called IMF crisis. In the new era of the fourth industrial revolution, Korean companies face slower growth and may have to deal with lack of new growth drivers, the economists said.

They advised the government to focus on making an income-led growth policy to create jobs, keeping household debt at manageable levels by adopting stricter lending rules, and creating a level playing field for businesses.

KERI is a research institute under the Federation of Korean Industries, one of the country's big business lobby groups. (Yonhap)