The 22nd edition of FIFA's flagship tournament gets underway in Qatar later this month.
Brazil will come into the tournament as the top most ranked side in the world buoyed by Paris Saint Germain superstar Neymar and will be looking to triumph for the first time since 2002.
Argentina will be led by Lionel Messi, another Paris Saint Germain star, and will come into the tournament as South American champions.
Europe might have dominated the World Cup in recent years, with Italy, Spain, Germany and France winning the last four editions but Xavi believes South America's leading duo are well placed to take the trophy home this time.
"Argentina and Brazil are a step ahead of everyone else," Xavi said on Friday.
"I see them very strong as a team, also with individual players, physical and in terms of tactics and strategy as well, they're two great teams.
"I think they're a step ahead of some of the best European teams right now. But in a World Cup you can never know. Everything can become complicated."
"The European teams are very important: Spain, France, even England, have got very strong national sides, but I think Brazil and Argentina are a step stronger."
