The Anfield board sanctioned expensive January moves for Daniel Sturridge and Philippe Coutinho, both of whom scored on their full debuts.
And Downing reckons the pair's arrival has created an edge in the squad responsible for 12 goals in three straight wins - six of them for Luis Suarez.
He told the club website: "It's all come together. Even at the start of the season, we were creating a lot of chances but maybe didn't have that killer instinct.
"Now, every chance Suarez gets he seems to be finishing. Coutinho has come in and added a bit, as has the arrival of Daniel Sturridge.
"The competition for places also helps. It's healthy for the team and the club.
"If we can keep the core of the squad together and the manager can add a few more, which is highly likely he will do, I think we've got a great chance next season.
"It was obviously going to take time to adjust under Brendan Rodgers. We're all enjoying playing in the way we do - the passing, moving and scoring goals - but I think we've also added steel to our team.
"We're hard to play against and not conceding that many goals, so I think the all-round picture at the moment is looking very good."
Liverpool go into the final 10 games of the season with 10 points to make up on fourth-placed Chelsea, but Downing has not given up on Champions league qualification.
He said: "The target is to try and win as many games as possible - we have to. If we want to challenge for the top four, we have to win nearly every game.
"We're doing quite well at the moment and we've still got a chance. It's going to be difficult - but we still have a chance."