Honda endured a troubled return to F1 in 2015 as it struggled with reliability and a lack of power from its new turbo V6 hybrid engine.
But having made gains over the campaign, and a significant revamp of key elements of its power unit over the winter, Wolff thinks that Honda is on course to deliver.
"Honda is a huge organization with lots of resource, and they were the power unit with the most impressive development curve through 2015," Wolff said in an interview with his Mercedes team's YouTube channel.
"Even if it was a very difficult year for them, it was still very good what they achieved in terms of how they progressed through the season. I have no doubt they will be a strong competitive in the future."
Wolff's comments come despite Mercedes engine chief Andy Cowell saying last week that he was not convinced that Honda's 'size zero' concept was the right approach for the current regulations.
As well as predicting good things for Honda in the future, Wolff has predicted promising results for the Mercedes-powered Manor team in 2016.
"Manor will make a big step up and not only because of the engine," said Wolff, who helped secure a drive at the Banbury-based team for Mercedes junior driver Pascal Wehrlein.
"There is a good bunch of people coming together: impressive individuals, with the right budget and right attitude, and Pascal in the car.
"I have confidence that the car and driver will have highlights and be a solid midfield runner."
This article by Jonathan Noble originally appeared on Motorsport.com, the world's leader in auto racing news, photos and video.