The Chelsea midfielder believes Fabio Capello could lead England to a first major title since 1966, and admits his own nation is lagging a bit behind.
“They have a great team and many players with exceptional individual class,” he told the Rheinische Post newspaper.
“With Fabio Capello, they now have a manager who has brought stability. That is important and the team feels that.
“They have got to be able to win games even when they are not playing at the highest level and that is what Italian managers are good at, particularly Capello.
“England are oozing self-confidence and I can sense that here. They are one of the favourites.”
Other favourites, according to Ballack, are Brazil, Italy and France – but not necessarily Germany.
“At a World Cup, everything has got to work, and then even more – you need luck,” he added.
“There are certainly teams who are better than us at the moment.”
That may well include his club Chelsea, who he feels have a better chance of winning the Champions League this season than Germany do of triumphing in South Africa.
“Of course that (the Champions League) is the title that one wants to win, especially when you have a squad like ours,” he said.
“But if you also have a chance to win the league, then that is once again a big aim.
“At a certain stage of the season, you reach the point where the strain is very high and then you have to decide which competition you want to focus on in particular.
“We have such a good squad and class that we can compete in both competitions.”
And Ballack believes that even if it were not to work out for the Blues this season, he would still have more chances to succeed, even though his contract expires in the summer.
“We will sit down together and talk soon,” he added. “But I am not under any pressure.
“Both parties know what they have in each other.”