And while TIME magazine named Merkel as 2015`s person of the year and US President Barack Obama hailed her courage, in Europe she is increasingly being accused of exacerbating the biggest migration crisis since World War II.
With no clear challengers to her role in Germany or in Europe, analysts said Merkel must once again take the lead in guiding Europe towards a lasting solution.
"The German decision bolstered the European Union`s values," analyst Yves Pascouaud at the European Policy Centre in Brussels, told AFP.
"On the other hand it was a unilateral decision in a shared context."
Matthieu Tardis, an analyst with the French Institute for International Relations, said Merkel applied international and European law by refusing to turn away refugees fleeing war in Syria.
"Preventing people from coming would have also led to catastrophe," Tardis told AFP.
"What`s happening in Europe is, before everything else, a crisis for Europe, European institutions, the European project."
Unprepared for the surge
Within the EU, Hungary`s hardline Prime Minister Viktor Orban has railed against Merkel`s "moral imperialism" and eastern European nations have accused Merkel of encouraging migrants to stream though their countries to Germany.
Analysts said Merkel seemed unprepared for the subsequent surge in asylum seekers from Turkey to Greece and then up through the Balkans to Hungary, Austria, Germany and northern Europe.
So far this year, Germany, Europe`s top economic power, has registered nearly a million new asylum seekers fleeing war and poverty.
After the initial influx, Germany then reintroduced temporary checks at its borders within Europe`s sprawling passport-free Schengen zone, triggering what Pascouaud called a "domino effect" as other countries followed suit.
Temporary checks are allowed under the rules for the 26-country Schengen zone -- a pillar of the European project alongside the euro currency -- but analysts warned the free-travel area could collapse in the face of the migrant crisis.
"The great danger lurking over the Schengen zone is that the member states permanently keep checks on the internal borders in breach of the rules," Pascouaud said.
Judy Dempsey, a Carnegie Europe analyst, wrote last month that Merkel had failed to prepare for the surge in asylum seekers, which had made her own domestic situation more shaky.
A sustainable policy?
"Merkel`s response has thrust Germany into an ambiguous leadership role," Dempsey said. "Having welcomed refugees, Berlin now has no option but to take the lead inside the EU in establishing a sustainable policy," she said.
So far, the jury is out whether she can do this as Europe struggles to forge a joint response to the refugee crisis.
Along with Jean-Claude Juncker, head of the European Commission, the EU`s executive arm, Merkel has led a drive to relocate 160,000 asylum seekers from frontline states Greece and Italy to other members of the bloc.
Preaching the need for European solidarity, Merkel and Juncker have also pushed for a permanent relocation scheme to respond to future migrant surges and for a plan to resettle refugees from camps in Turkey, Lebanon and Jordan.
But there is still massive resistance to plans to relocate and settle asylum seekers in Europe.
Luxembourg Foreign Minister Jean Asselborn, whose country currently holds the rotating EU presidency, dismissed as "illusory" the resettlement effort.
"We must not lose ourselves in a debate over the resettlement of hundreds of thousands of people," he said.
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