By overtaking Obama in the power stakes Merkel made it up to number two in the magazine's highly regarded ratings - a jump of three places on last year.
“The German Chancellor's global influence is as strong as ever. Merkel is the only woman who has appeared on this ranking every year,” the magazine said in a video explaining its choices.
“Merkel is the back bone of the 28 member European Union. Her decisive negotiating on problems including the Syrian refugee crisis and the Greek debt crisis have pushed her up the list,” the magazine wrote.
Obama had to make do with place three in the rankings, a choice Forbes explained by the fact he is coming to the end of his time in office.
For the second year running the US magazine considered Russian President Vladimir Putin to be the most powerful figure in the world.
Putin's position at the top of the charts was explained by the fact that “he is one of the few people in the world powerful enough to do what they want – and to see it through.”