Balotelli has scored seven goals in nine appearances for Nice in 2016-2017, although he has not played since 7 November due to a calf injury.
The former Liverpool forward last played for Italy in the 2014 World Cup, but Zola – who represented the Azzurri between 1991 and 1997 – thinks his international return after two and a half years away is not far away.
Zola told Omnisport: "It seems to me that he is working very well and I wish that he can maintain and sustain that level of performance for much longer.
"If he does that I'm sure it will only be a matter of time before he is back in the national team."
Italy boss Giampiero Ventura has said he is watching Balotelli and Zola is thrilled the striker, now 26, is managing the mental side of his game.
"With Balo it has never been a matter of his ability but it has been a matter of how well he can handle himself," Zola said.
"Whether or not he's going to be called into the national team is not down to me - it will be down to Ventura in this case.
"But I'm delighted that he is finding the balance that allows his qualities to come through."