Major policy efforts have helped Mexico reduce extreme poverty and improve access of the poorest to basic services, including health and education. Poverty and inequality in Mexico remain high in international comparisons, not only with other OECD countries but also with emerging economies. They continue to be a challenge of utmost priority for Mexican policy makers. Meeting that challenge requires a comprehensive strategy that includes labour market reforms to facilitate the expansion of the formal sector, measures to improve productivity in the agricultural sector, and policies to improve the quality of education and health services. In addition, social spending needs to be expanded, but also be made more efficient and better targeted to the most vulnerable groups.