ZAGREB- Croatia woke up on Monday as the newest EU state after a night of celebrations dampened by fears that membership to the bloc could add to the recession-hit country's economic burden.

"Good morning, citizens of the European Union," popular daily Jutarnji List wrote on its front page.

Becoming the 28th member of the EU club was "the most important (event) in the history of the country," the newspaper said, but warned it was "absurd to expect that the better life will come immediately with joining the EU."

Croatia is only the second former Yugoslav republic to join the bloc, after Slovenia, following the bloody breakup of the ex-communist federation in the 1990s.

Yet membership joy was tempered with worries that Croatia, with its 4.2 million population, would feel the pressure of the debt-wracked eurozone on its already weakened economy.

"Nothing has changed today, this (EU) project will cost us dearly," said 60-year old taxi driver Sreten Ilicic.

"The first baby born in EU Croatia overnight is already in debt because of the membership."

In his celebratory speech in Zagreb overnight, Croatian President Ivo Josipovic vowed not to "let the cloud of the economic crisis overshadow our vision and optimism."

"The crisis is a challenge, an invitation to make tomorrow better than today," he told the crowd. But German daily Die Welt downplayed Croatia's hopes, marking its entry with the words: "The next problem child arrives in the EU."

Croatia's centre-left government hopes that EU entry will attract badly needed foreign investment and boost the economy with 11.7 billion euros ($15 billion) of potential financial aid.

The country's tourism-oriented economy has been either in recession or stagnant for the past four years, while unemployment stands at around 20 percent.

Its per capita gross domestic product is 39 percent below the EU average, with only Romania and Bulgaria lagging behind, the bloc's figures show.