The Brit has no doubt that the German outfit's main rivals have made great strides over the winter and will challenge the Silver Arrows at the outset in Australia.
"They've done a fantastic job and I think there's more to come from them," Hamilton said, referring to Ferrari and Kimi Raikkonen topping the timesheet.
"Their pace has been spectacular. The others look very quick and it looks like we have a good battle on our hands.
"I don't know if Red Bull have brought their upgrade package here but normally they bring it to the first race. I expect us to be having a real serious battle with both these teams."
With Mercedes suspected to have not unleashed its full potential in Barcelona, Hamilton was asked whether 'mind games' were at the forefront of teams mutual comments about their relative performance.
"I don’t know if there’s mind games," Hamilton responded.
"Every year in testing the goal is not necessarily to go as quick as you can, it’s to find out what you have in the car.
"And sometimes there have been potentially some teams sandbagging in the past, but I don’t really see that as being a benefit to any team.
"Driving today, the time you saw was the time we could do. I didn’t feel when I got out that I could have gone faster.