BERLIN—Chancellor Angela Merkel said Friday she is sticking to her open-arms policy toward migrants and Germany should show its friendly face toward those people in need of sanctuary, despite sharp inner-party criticism and talk about a government crisis.

“The chancellor has the situation under control and the overall government too. But we have very special, very challenging times,” she said in an interview with German broadcaster ZDF, dismissing speculation that the migration crisis is getting out of hand.

“I am in favor of showing a friendly face of Germany. This is my open-arms policy.”

Ms. Merkel’s open-arms policy toward refugees has spurred disagreement within her own conservative parties, with some officials warning that Germany can’t handle the wave of migrants coming to the country this year. Berlin forecasts around 800,000 people will seek asylum this year, with some officials saying the number might rise to 1 million.

She dismissed suggestions of a power struggle within her government after heavy weights of her own conservative party, such as Interior Minister Thomas de Maiziere and Finance Minister Wolfgang Schäuble, called for a more effective limit on the influx of refugees in search of protection from war and persecution and of other migrants seeking a better life in Germany.