So far everything has gone swimmingly for the host nation with three consecutive group wins but the German captain said they could not afford to get complacent or start making errors.
“We know that at this stage every error means we could go out,” Ballack said at Thursday’s press conference.
“We are fit and playing well with the fans behind us but we cannot get carried away by the euphoria.”
Some German fans are already starting to look at a potential duel with South Americans in the quarter-finals but Ballack admits Sweden are the first real test after an easy opening group containing Costa Rica, Poland and Ecuador.
“We have been good so far but we need to put that behind us. Sweden are our first really difficult opponents,” Ballack declared.
“This team has to show it can get better and see if we can do that against Sweden. It will be an intense game.”
Sweden pinned England back in their own half in the second 45 minutes of Tuesday’s 2-2 group draw and Ballack was impressed.
“Sweden are tough and anyone who watched them in action against England knows that,” said the new Chelsea man.
“They made a very good impression. They are robust in midfield and good in the tackle. They move well and that is typical of Sweden. They are an unpleasant team to play.”
But Ballack said it was important not to get too caught up on how Sweden would play urging Germany to concentrate on playing to their own strengths.
“We want to concentrate on our game and not focus too much on opponents,” explained the 29-year-old former Bayern Munich playmaker.
“We have been well informed about the strengths and weaknesses of Sweden.”
Germany’s clear weakness in the build-up to the tournament was the leaky defence but Ballack believes two clean sheets against Poland and Ecuador show that is no longer a concern.
“I think it is important that we have realised to be more compact as that is the only way to be successful,” said Ballack.
“The 2002 World Cup showed that.”
Germany reached the 2002 World Cup final with a string of 1-0 wins before falling 2-0 to Brazil in the final, although Ballack was suspended for the final.
“At the moment we are not conceding goals and we are always capable of scoring them,” said Ballack.
Germany are joint top scorers in the competition alongside Argentina after bagging eight goals in three group games. Sweden have scored just three in as many matches.