You'd have to fetch that post, then produce a menu item for it..
<?php
$latest_post = get_posts( array( 'posts_per_page' => '1', 'paged' => 1, 'orderby' => 'date', 'order' => 'desc', 'post_type' => 'post', 'post_status' => 'publish' ) );
$latest_post = $latest_post[0];
$latest_link = '<a href="' . get_permalink( $latest_post->ID ) . '" title=" . the_title_attribute( array( 'echo' => 0 ) ) . ">Recent</a>';
// wp_reset_query(); // Uncomment this line if the code appears to cause problems with other queries
?>
<!-- example menu element follows -->
<li class=""<?php echo ( is_single( $latest_post->ID ) ) ? 'active_class' : 'non_active'; ?>>><?php echo $latest_link; ?></li>
Included active/non-active classes, update those names as appropriate..
Hope that helps..