Spain are the favorites, says the 25 year old.
The two European heavyweights will clash in the second semi-final of the World Cup in Durban, South Africa on Wednesday evening. The last time the two sides met in a competitive fixture was two years ago in the final of Euro 2008. At the time Spain emerged victorious as they won 1-0, thanks to a Fernando Torres goal.
Germany have been the more impressive of the two sides, having dispatched England and Argentina in the earlier rounds of the knockout stage with ease. Schweinsteiger himself has been in excellent form in the competition and ran the midfield against the Argentinians in the quarter-finals.
However, the Bayern Munich midfielder insists that Spain, and not Germany, are the favorites to win Wednesday's encounter. The 25-year-old has been quoted by PA as saying: "Losing a final always causes frustration and disappointment but Spain were definitely the better team [in the Euro 2008 final].
"On paper Spain are still the better team but I think we have shown in our last two games that we can beat teams that appear the better ones on paper.
"For me, Spain are the best team in the world. It will be tough just like it was against England and Argentina but I've a lot of faith in this team because we've seen what we can do if we all pull together."
The 25-year-old added: "Now we have fresh faces and different characters - an unencumbered state of mind. The younger players who have come in have gained experience during this tournament.
"Spain haven't changed that much. Sergio Busquets has replaced Marcos Senna but otherwise they are pretty much the same team as two years ago."
However, Schweinsteiger is hopeful of a win on Wednesday evening.
"Xavi, [Andres] Iniesta but also Xabi Alonso and [Gerard] Pique are great players, but we still have a chance against them.
"They are the decisive players for Spain because without them [David] Villa and [Fernando] Torres won't get the service needed to score goals.
"Spain haven't really dazzled in the way that their fans might have hoped but they have still been winning. If we can play as a team, just as we have done so far, then we stand a very good chance."
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