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Munich, GERMANY — Rapid developments in artificial intelligence could help strengthen defenses against security threats in cyber space, according to Google CEO Sundar Pichai.



Amid growing concerns about the potentially nefarious uses of AI, Pichai said that the intelligence tools could help governments and companies speed up the detection of — and response to — threats from hostile actors.



“We are right to be worried about the impact on cybersecurity. But AI, I think actually, counterintuitively, strengthens our defense on cybersecurity,” Pichai told delegates at Munich Security Conference at the end of last week.



Cybersecurity attacks have been growing in volume and sophistication as malicious actors increasingly use them as a way to exert power and extort money.



Cyberattacks cost the global economy an estimated $8 trillion in 2023 — a sum that is set to rise to $10.5 trillion by 2025, according to cyber research firm Cybersecurity Ventures.



A January report from Britain’s National Cyber Security Centre — part of GCHQ, the country’s intelligence agency — said that AI would only increase those threats, lowering the barriers to entry for cyber hackers and enabling more malicious cyber activity, including ransomware attacks.



However, Pichai said that AI was also lowering the time needed for defenders to detect attacks and react against them. He said this would reduce what’s known as a the defenders’ dilemma, whereby cyberhackers have to be successful just once to a system whereas a defender has to be successful every time in order to protect it.



“AI disproportionately helps the people defending because you’re getting a tool which can impact it at scale versus the people who are trying to exploit,” he said.



“So, in some ways, we are winning the race,” he added.



Google last week announced a new initiative offering AI tools and infrastructure investments designed to boost online security. A free, open-source tool dubbed Magika aims to help users detect malware — malicious software — the company said in a statement, while a white paper proposes measures and research and creates guardrails around AI.



Pichai said the tools were already being put to use in the company’s products, such as Google Chrome and Gmail, as well as its internal systems.



“AI is at a definitive crossroads — one where policymakers, security professionals and civil society have the chance to finally tilt the cybersecurity balance from attackers to cyber defenders.&nbsp;



The release coincided with the signing of a pact by major companies at MSC to take “reasonable precautions” to prevent AI tools from being used to disrupt democratic votes in 2024′s bumper election year and beyond.



Adobe, Amazon, Google, IBM, Meta, Microsoft, OpenAI, TikTok and X, formerly Twitter, were among the signatories to the new agreement, which includes a framework for how companies must respond to AI-generated “deepfakes” designed to deceive voters.



It comes as the internet becomes an increasingly important sphere of influence for both individuals and state-backed malicious actors.



Former U.S. Secretary of State Hillary Clinton on Saturday described cyberspace as “a new battlefield.”



“The technology arms race has just gone up another notch with generative AI,” she said in Munich.



A report published last week by Microsoft found that state-backed hackers from Russia, China, and Iran have been using its OpenAI large language model (LLM) to enhance their efforts to trick targets.



Russian military intelligence, Iran’s Revolutionary Guard, and the Chinese and North Korean governments were all said to have relied on the tools.



Mark Hughes, president of security at IT services and consulting firm DXC, told CNBC that bad actors were increasingly relying on a ChatGPT-inspired hacking tool called WormGPT to conduct tasks like reverse engineering code.



However, he said that he was also seeing “significant gains” from similar tools which help engineers to detect and reserve engineer attacks at speed.



“It gives us the ability to speed up,” Hughes said last week. “Most of the time in cyber, what you have is the time that the attackers have in advantage against you. That’s often the case in any conflict situation.



“If you can run a little bit faster than your adversary, you’re going to do better. That’s what AI is really giving us defensively at the moment,” he added.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107375463-1708428203684-gettyimages-2015599138-AFP_34JR9E8-820x547.jpeg" alt="" class="wp-image-458363" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107375463-1708428203684-gettyimages-2015599138-AFP_34JR9E8-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107375463-1708428203684-gettyimages-2015599138-AFP_34JR9E8-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107375463-1708428203684-gettyimages-2015599138-AFP_34JR9E8-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107375463-1708428203684-gettyimages-2015599138-AFP_34JR9E8-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107375463-1708428203684-gettyimages-2015599138-AFP_34JR9E8-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107375463-1708428203684-gettyimages-2015599138-AFP_34JR9E8-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">IBADAN, Nigeria &#8211; Feb. 19, 2024: Demonstrators are seen at a protest against the hike in price and hard living conditions in Ibadan on February 19, 2024. Samuel Alabi | Afp | Getty Images</figcaption></figure>



With annual inflation nearing 30% and a currency in freefall, Nigeria is facing one of its worst economic crises in years, provoking nationwide outrage and protests.



The Nigerian naira hit a new all-time low against the U.S. dollar on both the official and parallel foreign exchange markets on Monday, sliding to almost 1,600 against the greenback on the official market from around 900 at the start of the year.



President Bola Tinubu announced Tuesday that the federal government plans to raise at least $10 billion to boost foreign exchange liquidity and stabilize the naira, according to multiple local media reports.



The currency is down around 70% since May 2023 when Tinubu took office, inheriting a struggling economy and promising a raft of reforms aimed at steadying the ship.



In a bid to fix the beleaguered economy and attract international investment, Tinubu unified Nigeria’s multiple exchange rates and enabled market forces to set the exchange rate, sending the currency plunging. In January, the market regulator also changed how it calculates the currency’s closing rate, resulting in another de facto devaluation.



Years of foreign exchange controls have also generated enormous pent-up demand for U.S. dollars at a time when overseas investment and crude oil exports have declined.



“The weakened exchange rate should increase imported inflation, which will exacerbate price pressures in Nigeria,” Pieter Scribante, senior political economist at Oxford Economics, said in a note Friday.



The country is Africa’s largest economy and has a population of more than 210 million people, but relies heavily on imports to meet the needs of its rapidly growing population.



“Shrinking disposable incomes and worsening cost-of-living pressures should remain concerns throughout 2024, further stifling consumer spending and private sector growth,” Scribante added.



Inflation, meanwhile, continues to soar, with the headline consumer price index hitting 29.9% year-on-year in January, its highest level since 1996. The increase is being driven by a persistent rise in food prices which jumped by 35.4% last month compared to the year before.



The surging cost of living and economic hardship prompted protests across the country over the weekend. The plummeting currency has added to the negative impact of government reforms such as the removal of gas subsidies, which tripled gas prices.



President Tinubu said in late July that the government had already saved more than 1 trillion naira ($666.4 million) from removing the subsidies, which it will redirect into infrastructure investment.



Alongside soaring inflation and a plunging currency, Nigeria is also battling record levels of government debt, high unemployment, power shortages and declining oil production — its main export. These economic pressures are compounded by violence and insecurity in many rural areas.



“Excess market liquidity, exchange rate pressures, and food and fuel shortages threaten price stability, while inflation risks rising out of the government’s control,” Oxford Economics’ Scribante added.



“Robust import demand could force the Central Bank of Nigeria (CBN) to reimpose import bans and FX restrictions to lessen the burden on the balance of payments. This could exacerbate domestic product shortages and increase inflation further.”



Inflation is expected to peak at nearly 33% year-on-year in the second quarter of 2024, according to Oxford Economics, and could stay higher for longer given the plethora of economic risks ahead.



“Furthermore, rising inflation and increased hawkishness by the CBN indicate that the policy rate could be raised this quarter,” Scribante said. The policy rate currently sits at 18.75%.



“We expect a combined 200 bps in rate hikes at the next two MPC meetings, scheduled for end-February and end-March this year; however, we think that more hikes are needed to stem rising inflation,” Scribante added.



Jason Tuvey, deputy chief emerging markets economist at Capital Economics, sees the CBN opting for a bigger interest rate bazooka when policymakers meet on Feb. 26 and 27.



“The meeting will be a key test of whether the policy shift under President Tinubu is truly regaining some momentum,” Tuvey said in a note Thursday.



“We expect that the MPC will try to restore some of its inflation-fighting credibility by delivering a large interest rate of 400bp, to 22.75%.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/102851129-oilandgold-820x462.jpg" alt="" class="wp-image-458020" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/102851129-oilandgold-820x462.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/102851129-oilandgold-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/102851129-oilandgold-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/102851129-oilandgold-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/102851129-oilandgold.jpg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">(L) Oil pumpjacks and (R) gold bars Getty Images</figcaption></figure>



Gold prices could soar to $3,000 per ounce, and oil to $100 per barrel within the next 12 to 18 months subject to any one of three possible catalysts, according to Citi.



Gold, which is currently trading at $2,016, could surge by about 50%, if central banks sharply ramp up purchases of the yellow metal, a possible stagflation, or in case of a deep global recession, Aakash Doshi, Citi’s North America head of commodities research, told CNBC.



<h2 class="wp-block-heading" id="h-central-bank-s-gold-rush"><a></a>Central bank’s gold rush</h2>



“The most likely wildcard path to $3,000/oz gold is a rapid acceleration of an existing but slow-moving trend: de-dollarization across Emerging Markets central banks that in turn leads to a crisis of confidence in the U.S. dollar,” Citi analysts including Doshi wrote in a recent note.



That could double central bank’s gold purchases, challenging jewelry consumption as the largest driver of gold demand, Doshi elaborated. 



Central banks’ gold purchases have “accelerated to record levels” in recent years, as they seek to diversify reserves and reduce credit risk, Citi said. China and Russian central banks are leading gold purchases, with India, Turkey, and Brazil, also increasing&nbsp;bullion buying.



The world’s central banks have sustained two successive years of more than 1,000 tons of net gold purchases, the World Gold Council reported in January.



“If that goes again [to] double very quickly to 2,000 tons, we think that would be actually very bullish for gold,” Doshi told CNBC via phone.



<h2 class="wp-block-heading"><a></a>A global recession?</h2>



Another trigger that could drive gold to $3,000 would be a “deep global recession” that could spur the U.S. Federal Reserves to cut rates rapidly.



“That means the brakes have been cut, not to 3%, but to 1% or lower &#8211; that will take us to $3,000,” Doshi said, noting that this is a low probability scenario.



Gold prices tend to share an inverse relationship with interest rates. As interest rates dip, gold becomes more appealing compared to fixed-income assets such as bonds, which would yield weaker returns in a low interest rate environment. 



The Fed benchmark interest rate has been between 5.25% and 5.5% since July 2023, the highest since January 2001 when it shot to 6% following the dot-com bubble burst. Markets expect the Fed to cut rates in May or June.



Stagflation — an increasing inflation rate, a slowing economic growth and rising unemployment — could be another trigger, though Doshi said there’s a “very low probability” of such a scenario.



Gold is perceived as a safe haven and tends to perform well in periods of economic uncertainty when investors move away from the riskier assets such as equities.



These three potential triggers aside, Citi maintains that their base case for bullion is $2,150 in the second half of 2024, and the price of gold to average a little over $2,000 in the first half. A new record could be reached towards the end of 2024, Doshi added.



<h2 class="wp-block-heading"><a></a>Oil at $100?</h2>



Another wildcard scenario highlighted in Citi’s report was for oil prices to hit triple digits again.



The catalysts for oil to hit $100 per barrel include higher geopolitical risks, deeper OPEC+ cuts and supply disruptions from key oil producing regions, Doshi said.&nbsp;



The ongoing Israel-Hamas war has not hit oil production or exports, with the only significant impact being the Houthi attacks from Yemen on oil tankers and other ships traversing the Red Sea.



Major oil producer Iraq has been impacted by the conflict and any further escalation could hurt other major OPEC+ suppliers in the region, Citi said.



Recent developments show that tensions have been rising on the border between Israel and Lebanon, raising fears that the war in Gaza could spread elsewhere in the Middle East.



Doshi said Iraq, Iran, Libya, Nigeria and Venezuela are vulnerable to supply disruptions, with steeper U.S. sanctions policy on Iran and Venezuela potentially on the cards.&nbsp;



Other geopolitical risks such as Russian oil supplies, should Ukraine attack Russian refineries with drones, cannot be ruled out, Citi’s analysts wrote. Doshi maintained that their base case for oil stands at around $75 per barrel for the year.



Global benchmark Brent’s April futures were trading at $83.56 a barrel, while the U.S. West Texas Intermediate March futures stood at $79.13 per barrel.<a href="https://www.tetrapak.com/insights/trendipedia" target="_blank" rel="noreferrer noopener"></a>

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