Croatia formally became the newest member of the European Union on Monday, marking an end to a 10-year campaign for a Balkan state that emerged from the ruins of a bloody civil war.

The celebrations began as the clock struck midnight Sunday. Fireworks lit the sky in the capital Zagreb, a choir sang "Ode to Joy" and thousands clinked champagne glasses and erupted in cheers, CNN reported.

"Welcome to your union, welcome to our union," EU President Herman Van Rompuy told the crowd.

The nation of 4.4 million people is the 28th member of the EU, and the second Balkan country that rose out of the ashes of Yugoslavia to join the union. Slovenia became a member in 2004.

With a low credit rating of junk and a political class stained by accusations of endemic corruption, Croatia's challenges are unlikely to disappear overnight.

It is three years into a debt crisis that is plaguing countries across southern Europe.

One of the challenges facing Croatia is its growth prospects. The financial crash of 2008 brought about a harsh double-dip recession that left the country's economy lingering in the doldrums.

Last year, unemployment peaked at 17.3% which is behind only Greece and Spain, according to Eurostat - the European Commission's data archive.

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