The Gunners last remaining hope of silverware – and arguably of salvaging respectability for their campaign – lies in the Europa League, in which they face AC Milan in the round of 16 first leg on Thursday.
“It is a difficult situation for us," Kolasinac told DAZN. “We did not play well in the two games against Manchester City.
“In some situations, we did not play bad. But honestly, we have to say that Manchester City have a phenomenal team, especially in their attack. Sometimes you have to admit that they are better or are in a better situation.
“They are first in the league with a huge gap to second. Naturally, they are playing different. But the atmosphere in our team has to be good and it is good as well, because we cannot bury our heads in the sand right now.
“On Thursday, we fly to Milan. We cannot bury our heads in the sand. We have to look forward and try to do better next time."