Mary Lou McDonald (C), President of Sinn Fein and Eoin O'Broin (L) of Sinn Fein greet supporters in Dublin City Centre on February 10, 2020 in Dublin, Ireland.

Nationalist Irish party Sinn Fein's likely ambition to reunify Ireland, and the possible societal, political and economic ramifications of that could be a risk to the country's economy, according to an economist.

Capital Economics' Senior Europe Economist Jack Allen-Reynolds said Monday that Ireland's general election result "does not change our view on the near-term outlook for the economy, which should maintain a decent pace this year and next."

"But it does raise questions about the longer-term risks to public finances, particularly if Irish unification eventually becomes a more realistic possibility," he said in a note, adding that there are "at least" two key risks for the country.

"The first is that the increased influence of SF (Sinn Fein) means that Ireland runs much looser fiscal policy, which could lead to concerns about debt sustainability. The second is that there is a serious push for Irish reunification," he said.

"SF has said that it would only join a coalition if other parties agreed to hold a referendum on Irish unity. FF (Fianna Fail) is also pro-unification, but is more cautious on holding a vote. If unification ever took place, it could put a huge strain on Ireland's public finances," he said.

Allen-Reynolds noted that whatever the outcome of the coalition talks, fiscal policy is likely to be a little looser over the next few years than it has been for some time.

"Ireland's budget balance has switched from deficit to surplus since the last election, thanks to a combination of fairly strong economic growth and tight fiscal policy. But during the election campaign, polls suggest that by far the most important issues for voters were health care and housing, and all of the parties have pledged to increase spending in these areas."