The ranking features 71 names, a figure Forbes said it set as a cutoff because there are an estimated 7.1 billion people in the world and thus the ranking works out to one very heavy hitter for every 100 million people.
For the second year in a row, US President Barack Obama led the ranking, with Forbes noting that he won the popular vote, an electoral college majority, and seven of the seven toss-up states in the November election.
Mr Obama faces challenges galore, such as a budget crisis, stubbornly high unemployment, and renewed strife in the Middle East.
"But Obama remains the commander in chief of the world's greatest military and head of the sole economic and cultural superpower - literally the leader of the free world," Forbes said.
The silver medal of power went to Mrs Merkel, the German chancellor, whom Forbes described as the backbone of the 27-member European Union and the person who carries the fate of the euro on her shoulders.
Third place went to Russian President Vladimir Putin. He was re-elected to a third term "after a few years swapping posts with Prime Minister Dmitri Medvedev," and "officially regains the power that no one believes he truly gave up."
Forbes said it assembled the list using four criteria: power over lots of people, financial resources controlled, whether the person has power in various spheres of life, and whether that person actively uses their power.
New York Mayor Michael Bloomberg - 16 on the list - fit the bill nicely because he is a politician overseeing a huge and hugely important city, and is a billionaire, a media magnate and a major philanthropist.
Microsoft founder Bill Gates was fourth, while Pope Benedict XVI, leader of the world's 1.2 billion Catholics, ranked fifth.
Facebook CEO Mark Zuckerberg was 25th. He dropped from 9th in last year's ranking because Facebook's debut this year as a listed company was a dud, Forbes said.
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