New earthquake strikes Chile as billionaire Sebastian Pinera is sworn in as President

Businessman becomes country's first conservative leader since Pinochet

It couldn't have been a more dramatic prelude to Sebastian Pinera's presidency. As the new Chilean leader arrived at the Congress building yesterday to be sworn in to office, a 7.2 magnitude earthquake struck the centre of the country, sending people running out into the streets in panic.

It seems almost inappropriate to call a tremor of that magnitude an aftershock, but if that is what it was, it was the strongest to hit Chile since the devastating quake of 27 February. The tremor sparked a tsunami warning and an order to evacuate a 900-mile stretch of coastline.

At the scaled-back inauguration in the port city of Valparaiso, dignitaries kept their nerve and pressed ahead with the ceremony – although Bolivian President Evo Morales appeared briefly disoriented and Peru's Alan Garcia quipped that the invitees had had "a moment to dance".

But as soon as the formalities were over, and Mr Pinera had been handed the presidential sash, the building was evacuated. Hundreds of people fled the port area to higher ground, fearing a tsunami.

It was a stark reminder of the challenges the new president faces. Half a million homes were destroyed by last month's quake, and the cost of rebuilding Chile's buckled roads and rubble-strewn cities has been estimated at up to $30bn [£19bn]. For a small country like this, that represents close to 20 per cent of GDP.

Chile has the money and know-how to cope. It's survived big earthquakes before and has the soundest economy in the region. The government has saved billions of dollars from the sale of its chief commodity, copper, for precisely this kind of emergency.

But Mr Pinera, the 60-year-old billionaire businessman, has acknowledged that he has had to rip up his plans for government before his tenure has begun. Many of his proposed social reforms, in the area of education for example, might now be shelved. "Ours will be a government of reconstruction," he pledged.

As soon as he left Congress, the new president headed to Rancagua, the city closest to the epicentre of the aftershock, to survey the damage. The new interior minister changed plans and rushed back to the National Emergency Office in Santiago to monitor the aftershocks. From day one, the government is having to play things by ear.

Despite the enormity of the task, the earthquake aftermath could play into Mr Pinera's hands. He is assuming office amid a tremendous outpouring of solidarity and patriotism. Chileans have donated millions of dollars to help survivors and everywhere in the capital, Santiago, there are red, white and blue flags. If the president can harness this goodwill and national defiance in the face of adversity, it could propel his government forward.

Secondly, he is likely to benefit from a bounce in the economy in the second half of this year, as the reconstruction effort kicks in. Some analysts have even upgraded their GDP growth forecasts for Chile.

Amid the drama of the aftershocks, the symbolism of yesterday's handover ceremony was largely forgotten, but this would have been the most significant change in government in Chile in a generation. Mr Pinera is the country's first conservative leader since General Augusto Pinochet in the 1980s, and this is the first time the right has taken power through the ballot box in Chile since 1958. His ascendency ends 20 years of centre-left rule.