The controversial 20-year-old, who has made just one appearance for the Hammers, has had a superb season with the Championship side this term.
It has been suggested that he will now be ready to return to east London this summer and fight for a place in Sam Allardyce's Premier League side.
But another year-long loan spell away from Upton Park is not out the question either, according to McDonald.
McDonald said: "One of the reasons we sent him to Birmingham was to try and get that consistent time on the field. He would have had a battle on to get into the team here.
"He has gone to Birmingham, got in the team and played well consistently which is great.
"I saw comments from Lee Clark that he might possibly want to take him on loan again next year to give him some more experience. That would be great and it is a decision that the manager has to make.
"Do we bring him back because he's had a good a year's football in him or do we leave him there for another year to see if he will develop even more? We'll decide that in the summer."