City will be crowned champions if second placed Arsenal lose at Nottingham Forest on Saturday or if the leaders beat Chelsea on Sunday.
One win from their final three games is enough for City to take the title for a fifth time in six seasons.
It is a bitter pill to swallow for Arteta after his team led the title race for much of the season.
The Gunners have endured criticism of their failure to hold off City, with last weekend’s dismal 3-0 defeat against Brighton sparking questions about the character of Arteta’s squad.
But, in a thinly-veiled dig at their detractors, Arsenal boss Arteta said his team had surpassed expectations by pushing treble-chasers City so hard.
“We have shown this season,” Arteta replied when asked if Arsenal can be title contenders again next season. “We’re still there, with two games to go (City have three as they have a game in hand) we can still be champions against probably the best team in Premier League history.
“For 10 months we’re still there. There’s two games still to go and we’re not going to bottle that for sure.
“What happens next season will depend on what we do, how we evolve and how we start. That prediction is very difficult to do today.”
Arteta did concede improvements will need to be made to his young team before Arsenal can expect to hold their own in the Champions League next season.
“At the level that we want? No. We didn’t have the capacity to do that as well with the Europa League so it’s part of that evolution,” he said.
“We want to be better and the rest will be better, then the margins will be higher and we have to start to live with those standards and improve and be smarter.”
Meanwhile, Arteta said discussions over the future of Granit Xhaka will wait until the end of the season.
Xhaka is approaching the final 12 months of his contract and has been linked with a move to Bayer Leverkusen.
The Switzerland midfielder played for four years with Borussia Monchengladbach before he moved to Arsenal in 2016.
“The clarity is there. He is a player that has played I think every minute since I have been the manager,” Arteta said.
“He is an incredibly respected figure at the club. Whatever happens is something we will discuss, certainly not now.”
Arsenal duo Oleksandr Zinchenko (calf) and Gabriel Martinelli (ankle) will not feature again this season.
“Gabi’s is a pretty nasty injury, we need to assess in the next week how long he’ll be out for,” Arteta said.