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The issue is that the WDT is not configured correctly for the selected device. Therefore the device was never waking up from deep sleep by WDT.
Changes to be made:
void InitializeWdt(uint32 wdtValue)
CySysWdtWriteMatch(CySysWdtReadMatch() + wdtValue);
/* Enable WDT interrupt in SRSS INTR mask register */
CySysWdtWriteMatch((uint16)CySysWdtReadMatch() + wdtMatchValue);
For more information refer to the device specific system reference guide for more information on how to setup WDT.
I'm adding the modified project file. Please let us know if it works for you.