“It is unquestionable that Germany benefits from (the route closure, but) we can see from pictures out of Greece that that is not a sustainable solution,” she told journalists a day after her party suffered a drubbing in state polls over her liberal refugee policy.
Germany, which last year recorded thousands of asylum seekers arriving each day, has seen numbers drop significantly since western Balkan states shut down the route used by migrants.
Merkel's Christian Democratic Union (CDU) was at the receiving end of voter anger, suffering defeats in two out of three states in Sunday's elections – including traditional stronghold Baden-Wuerttemberg.
The rebuff was accompanied by a surge in support for the anti-migrant AfD, with Merkel acknowledging a “protest vote”.
Nevertheless, Merkel said she would push on with her strategy to halt a record influx of asylum seekers that reached 1.1 million in 2015.
She is banking on a common European policy to bolster the security of the EU's external borders and cooperate with Turkey to stem refugee flows.
“I think that the approach is correct,” she said.
Just days ahead of an EU summit when leaders are due to hammer out the details of proposals with Turkey she signalled however that she would not give Ankara carte blanche in a bid to clinch an agreement.
“There are issues related to Turkey, and it is very important to say that Turkey must fulfil certain conditions, there is no compromise,” she said.
Turkey is the main departure point for migrants trying to reach Europe and Brussels sees cooperation with Ankara as essential to stem the influx.
But negotiations related to the protection of the EU's borders are not automatically tied to eventual membership of the bloc for Turkey, Merkel said.
The mooted deal between Ankara and Brussels, discussed at an EU summit on Monday and due to be finalized on March 17th to 18th, would see Turkey take back all illegal migrants landing in Greece.
Ankara proposed an arrangement under which the EU would resettle one Syrian refugee from camps in Turkey in exchange for every Syrian that Turkey takes from Greece, in a bid to reduce the incentive for people to board boats for Europe.
In return though, Turkey wants billions of euros more in aid, visa-free access to Europe's passport-free Schengen zone and a speeding up of Ankara's bid to join the EU – demands that go too far for some.