To comply with the belt-tightening measures, salaries have been cut for many workers in Greece, pensions and benefits have been slashed, and unemployment rates have soared.
As of May, 53.8% of Greeks younger than 25 were unemployed, according to Eurostat, the statistics division of the European Commission.
A number of those who demonstrated in Athens on Tuesday said it was the first time they had taken to the streets to protest the economic crisis -- a reflection, perhaps, of how widely the anger over austerity is now felt.
Many of the protesters were retirees, a group that has lost, in many cases, more than 30% of its income since the crisis hit. Retirees are also among the groups that will be most affected by the new measures to which Greece must agree in order to receive the next tranche of its international bailout loan.
Maria Kirioni, a 53-year-old civil servant, told CNN she was protesting for the first time since she was a university student. "Merkel does not know what is going on in Greece. She only hears the politicians' voices. We must show her. It would be better if she stayed longer to see the reality," Kirioni said.
Stella Gianakopoulou, a 56-year-old schoolteacher who lived in Wupertal, Germany, for 18 years, said: "Merkel will cause the eruption of Greek society, and then this will spread throughout southern Europe. This may lead to a eurozone collapse."
But Rafael Voulgarakis, a university student, welcomed the German chancellor's visit. "It is clearly positive, because as we know, Germany is the largest power in Europe at the moment and one of the largest powers in the world," he said. "It is clear that the support of Ms. Merkel is good for our country and is needed."
CNN iReporter Margaret Roesler, from Minnesota, saw the buildup to the protest. "It seemed like a fairly tense atmosphere," she said. "The main road near our apartment was absolutely deserted, seems like everything shut down for the day. Someone told us to use extreme caution and to leave as soon as possible, which we did."
German Foreign Minister Guido Westerwelle told Bild newspaper last week that Greece deserves "fairness and respect." He suggested that Merkel's visit represents a show of eurozone solidarity between nations that are fiscally healthy and those that are debt-ridden and battling savage cuts and social unrest.
Christoph Weil, a senior economist at Commerzbank, told CNN that Merkel's visit to Athens comes as a "surprise" and that there was "a significant risk that Greece will exit the euro in the next two years."
However, Wolfango Piccoli, director of Eurasia Group, says that the risk of a Greek exit from the eurozone remains "marginal" at the moment and that the so-called troika -- the European Commission, European Central Bank and International Monetary Fund -- will provide Greece with the next tranche of bailout funds to meet its debt obligations.
But Piccoli warns that the country will have to undergo stringent austerity measures before creditors will release any funds.
"The vast majority will come from an additional round of cuts to wages and pensions. It's going to be almost 8 billion euros of the 13.5 billion euros coming from that. The total cut is 11.5 billion euros and then 2 billion euros of additional taxes," he told CNN.
On Monday, the Eurogroup -- a meeting of eurozone finance ministers -- convened in Luxembourg to give the green light to the European Stability Mechanism, the 17-nation currency bloc's permanent bailout fund.
Spain is expected to be the first country to make a request for financial aid from the ESM.