Factory output shed 1.2 percent in 2012 from a year earlier , the government said on Thursday. This marked the first decline since 2002, when Latin America's No. 3 economy was in deep crisis.

An economic boom since 2003 ended abruptly last year because of sluggish global conditions, high inflation, a drought-hit 2011/12 grain harvest, and the impact of government import and currency controls on investment.

In December, industrial production fell by a larger-than-expected 3.4 percent from a year earlier. Nine analysts polled by Reuters had forecast a 0.6 percent median decline, with estimates ranging from a 1.6 percent drop to a 3.1 percent increase.

Factory output dipped 0.6 percent in December compared with November, seasonally adjusted, the government said.

Last year's poor performance partly stemmed from a downturn in the auto industry, which depends heavily on exports to Brazil. But tough import rules also played a role by delaying the entry of some foreign-made parts, and domestic demand cooled as overall economic growth slowed.

Automobile production improved in December year-on-year but output fell 7.8 percent in 2012 as a whole, according to private carmaker group ADEFA.