German society and the economy stand to benefit from the influx of hundreds of thousands of refugees, Chancellor Angela Merkel said on Thursday, repeating her optimistic mantra "we can do this".

In her New Year address to the nation, Merkel acknowledged that the integration of migrants, many of them Muslims fleeing war in the Middle East, would cost Germany "time, strength and money". But the country was strong enough to cope, she said, pointing to low unemployment and rising wages.

"I am convinced that if we tackle the formidable task posed by the influx and integration of so many people in the right way today, then this will represent an opportunity for us tomorrow," Merkel said in the text of a speech supplied by the government before she spoke.

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