Merkel's domestic track record is not the best. The government seems to be in the business of arguing within the coalition for months and then deciding on almost nothing. In 2009 the parties came into power on the promise to reform taxes, the health care system and our energy mix. What was decided in the end was a reduced tax for hotel breakfasts, savings of up to €40 a year in payments for visits of doctors and the outright destruction of the solar energy sector, while failing to act in time to stop the consumer electricity prices from getting out of control. The performance of the coalition was described last year in Sueddeutsche thusly:
He, who up to now was sceptical if the coalition is as really as bad as its reputation, has now been converted: it is worse.
Several times it looked like the coalition would end, primarily FDP and CSU, the smaller partners did not seem to agree on anything, while CDU was standing by idly. So why in the world would any German citizen decide to vote for Merkel again?
I see three reasons: 1) Germans are happy with Merkels handling of the euro crisis. 65 % agree (also the source for the approval numbers) that the Chancellor acted correctly and detirmined. A few percentage points more than before the Cyprus "rescue". The situation in the euro area also distracts from the domestic performance. Merkel's and Schäuble's approval ratings are the highest in Germany with 68 % and 63 % approval respectively.
2) The SPD (the biggest oposition party) fails to offer an actual alternative both domestically and on the European austerity policy. The party seems to bet on a junior role after September. In their party program they call for a little reduced austerity, not for a real policy change. At the same time Steinbrück, the SPD's candidate not only earned a lot of money (€1.2 Million) through speeches sponsored by financial institutions, he is also in the brick dropping business. Calling Grillo and Berlusconi clowns for example, which might be not that far of the truth but lead to the Italian president cancelling a dinner with Steinbrück. When one earns so much by giving speeches it might also not be a good idea to call for a higher salary for the chancellor especially if you are in a social democratic party running on a social justice campaign.
3) Merkel avoided the arguments in the coalition very well. The smallest partner FDP was damaged though. Of course it also didn't help that they showed that they are the party of the 1 % and very dismissive of the poor. In 2009 the party saw 14,6 % of the electorate behind it, but this year they probably wont even make it over the 5 % hurdle. The advent of the AfD makes it less likely for the FDP to be in the next Bundestag. The smallest partner has basically become the scape goat for all the shortcomings of the coalition. The approval ratings of the party leader and economics minister Rösler are with 18 % the the lowest of any major politician in Germany.
I did not talk about the Greens and the Left (Linke). The former are competing for the junior party role in the next Merkel government with the SPD and the latter is not an acceptable partner for any one but will probably reduce the chances of a new red-green coalition. If there ever was a real chance for one this year.