Merkel and Greek Prime Minister Antonis Samaras spoke with reporters as demonstrators protested Merkel's generally hard line on austerity measures following the International Monetary Fund and the European Union bailout of Greece.
The protests were peaceful for the most part, although riot police at one point fired tear gas in Syntagma Square, in front of the Parliament building, ekathimerini.com reported Tuesday.
Merkel acknowledged many people are suffering during a "very difficult phase" but said Greece has made progress in lowering its deficit and passing reforms, CNN reported.
"It's for this reason that I would like to say that a huge part of the journey has already been accomplished," Merkel said.
"Germany and Greece are going to work very closely together," she said.
Samaras' coalition government is required under terms of the bailout to cut the national budget by 11.5 billion euros ($14.49 billion) to trigger another bailout payment this month.
Greek President Karolos Papoulias said the Greek people "have nearly exhausted how much they can take," CNN reported.
"And of course we need to think of measures that will give hope to these people that are suffering."
Papoulis told Merkel steps must promote economic growth and spur hiring for women and younger workers, CNN said.
A spokesman for a labor union that helped organize the protests put the number of participants at 80,000.
At the demonstration, hooded youths could be seen breaking chunks of rock from the pavement to hurl at police, and another group of protesters attempted to break through a metal barricade near Parliament, ekathimerini said.