Just look at Blakes shadow in the birth scene. There is no baby in his hands! Even Lynn says: “There is nothing there.”
You can find the reason for this is outlast 1 Whistleblower: there are no women in the asylum because they became pseudo pregnant during the experiments. That’s why her belly grows rapidly (because of the strange microwaves perhaps) and got “pregnant” even though she and Blake didn’t have sex in months (he outright says it).
Knoth and Blake are hallucinating. So I guess there is also no apocalypse/bomb whatever. Or Murkoff tried to get rid of that place.